Financial fraud is everywhere

Jun 4, JDN 2457909
When most people think of “crime”, they probably imagine petty thieves, pickpockets, drug dealers, street thugs. In short, we think of crime as something poor people do. And certainly, that kind of crime is more visible, and typically easier to investigate and prosecute. It may be more traumatic to be victimized by it (though I’ll get back to that in a moment).

The statistics on this matter are some of the fuzziest I’ve ever come across, so estimates could be off by as much as an order of magnitude. But there is some reason to believe that, within most highly-developed countries, financial fraud may actually be more common than any other type of crime. It is definitely among the most common, and the only serious contenders for exceeding it are other forms of property crime such as petty theft and robbery.

It also appears that financial fraud is the one type of crime that isn’t falling over time. Violent crime and property crime are both at record lows; the average American’s probability of being victimized by a thief or a robber in any given year has fallen from 35% to 11% in the last 25 years. But the rate of financial fraud appears to be roughly constant, and the rate of high-tech fraud in particular is definitely rising. (This isn’t too surprising, given that the technology required is becoming cheaper and more widely available.)

In the UK, the rate of credit card fraud rose during the Great Recession, fell a little during the recovery, and has been holding steady since 2010; it is estimated that about 5% of people in the UK suffer credit card fraud in any given year.

About 1% of US car loans are estimated to contain fraudulent information (such as overestimated income or assets). As there are over $1 trillion in outstanding US car loans, that amounts to about $5 billion in fraud losses every year.

Using DOJ data, Statistic Brain found that over 12 million Americans suffer credit card fraud any given year; based on the UK data, this is probably an underestimate. They also found that higher household income had only a slight effect of increasing the probability of suffering such fraud.

The Office for Victims of Crime estimates that total US losses due to financial fraud are between $40 billion and $50 billion per year—which is to say, the GDP of Honduras or the military budget of Japan. The National Center for Victims of Crime estimated that over 10% of Americans suffer some form of financial fraud in any given year.

Why is fraud so common? Well, first of all, it’s profitable. Indeed, it appears to be the only type of crime that is. Most drug dealers live near the poverty line. Most bank robberies make off with less than $10,000.

But Bernie Madoff made over $50 billion before he was caught. Of course he was an exceptional case; the median Ponzi scheme only makes off with… $2.1 million. That’s over 200 times the median bank robbery.

Second, I think financial fraud allows the perpetrator a certain psychological distance from their victims. Just as it’s much easier to push a button telling a drone to launch a missile than to stab someone to death, it’s much easier to move some numbers between accounts than to point a gun at someone’s head and demand their wallet. Construal level theory is all about how making something seem psychologically more “distant” can change our attitudes toward it; toward things we perceive as “distant”, we think more abstractly, we accept more risks, and we are more willing to engage in violence to advance a cause. (It also makes us care less about outcomes, which may be a contributing factor in the collective apathy toward climate change.)

Perhaps related to this psychological distance, we also generally have a sense that fraud is not as bad as violent crime. Even judges and juries often act as though white-collar criminals aren’t real criminals. Often the argument seems to be that the behavior involved in committing financial fraud is not so different, after all, from the behavior of for-profit business in general; are we not all out to make an easy buck?

But no, it is not the same. (And if it were, this would be more an indictment of capitalism than it is a justification for fraud. So this sort of argument makes a lot more sense coming from socialists than it does from capitalists.)

One of the central justifications for free markets lies in the assumption that all parties involved are free, autonomous individuals acting under conditions of informed consent. Under those conditions, it is indeed hard to see why we have a right to interfere, as long as no one else is being harmed. Even if I am acting entirely out of my own self-interest, as long as I represent myself honestly, it is hard to see what I could be doing that is morally wrong. But take that away, as fraud does, and the edifice collapses; there is no such thing as a “right to be deceived”. (Indeed, it is quite common for Libertarians to say they allow any activity “except by force or fraud”, never quite seeming to realize that without the force of government we would all be surrounded by unending and unstoppable fraud.)

Indeed, I would like to present to you for consideration the possibility that large-scale financial fraud is worse than most other forms of crime, that someone like Bernie Madoff should be viewed as on a par with a rapist or a murderer. (To its credit, our justice system agrees—Madoff was given the maximum sentence of 150 years in maximum security prison.)

Suppose you were given the following terrible choice: Either you will be physically assaulted and beaten until several bones are broken and you fall unconscious—or you will lose your home and all the money you put into it. If the choice were between death and losing your home, obviously, you’d lose your home. But when it is a question of injury, that decision isn’t so obvious to me. If there is a risk of being permanently disabled in some fashion—particularly mentally disabled, as I find that especially terrifying—then perhaps I accept losing my home. But if it’s just going to hurt a lot and I’ll eventually recover, I think I prefer the beating. (Of course, if you don’t have health insurance, recovering from a concussion and several broken bones might also mean losing your home—so in that case, the dilemma is a no-brainer.) So when someone commits financial fraud on the scale of hundreds of thousands of dollars, we should consider them as having done something morally comparable to beating someone until they have broken bones.

But now let’s scale things up. What if terrorist attacks, or acts of war by a foreign power, had destroyed over one million homes, killed tens of thousands of Americans by one way or another, and cut the wealth of the median American family in half? Would we not count that as one of the greatest acts of violence in our nation’s history? Would we not feel compelled to take some overwhelming response—even be tempted toward acts of brutal vengeance? Yet that is the scale of the damage done by the Great Recession—much, if not all, preventable if our regulatory agencies had not been asleep at the wheel, lulled into a false sense of security by the unending refrain of laissez-faire. Most of the harm was done by actions that weren’t illegal, yes; but some of actually was illegal (20% of direct losses are attributable to fraud), and most of the rest should have been illegal but wasn’t. The repackaging and selling of worthless toxic assets as AAA bonds may not legally have been “fraud”, but morally I don’t see how it was different. With this in mind, the actions of our largest banks are not even comparable to murder—they are comparable to invasion or terrorism. No mere individual shooting here; this is mass murder.

I plan to make this a bit of a continuing series. I hope that by now I’ve at least convinced you that the problem of financial fraud is a large and important one; in later posts I’ll go into more detail about how it is done, who is doing it, and what perhaps can be done to stop them.

No, this isn’t like Watergate. It’s worse.

May 21, JDN 2457895

Make no mistake: This a historic moment. This may be the greatest corruption scandal in the history of the United States. Donald Trump has fired the director of the FBI in order to block an investigation—and he said so himself.

It has become cliche to compare scandals to Watergate—to the point where we even stick the suffix “-gate” on things to indicate scandals. “Gamergate”, “Climategate”, and so on. So any comparison to Watergate is bound to draw some raised eyebrows.

But just as it’s not Godwin’s Law when you’re really talking about fascism and genocide, it’s not the “-gate” cliche when we are talking about a corruption scandal that goes all the way up to the President of the United States. And The Atlantic is right: this isn’t Watergate; it’s worse.

First of all, let’s talk about the crime of which Trump is accused. Nixon was accused of orchestrating burglary and fraud. These are not minor offenses, to be sure. But they are ordinary criminal offenses, felonies at worst. Trump is accused of fundamental Constitutional violations (particularly the First Amendment and the Emoluments Clause), and above all, Trump is accused of treason. This is the highest crime recognized by the Constitution of the United States. It is the only crime with a specifically listed Constitutional punishment—and that punishment is execution.

Donald Trump is being investigated not for stealing something or concealing information, but for colluding with foreign powers in the attempt to undermine American democracy. Is he guilty? I don’t know; that’s why we’re investigating. But let me say this: If he isn’t guilty of something, it’s quite baffling that he would fight so hard to stop the investigation.

Speaking of which: Trump’s intervention to stop Comey is much more direct, and much more sudden, than anything Nixon did to stop the Watergate investigations. Nixon of course tried to stonewall the investigations, but he did so subtly, cautiously, always trying to at least appear like he valued due process and rule of law. Trump made no such efforts, openly threatening Comey personally on Twitter and publicly declaring on national television that he had fired him to block the investigation.

But perhaps what makes the Trump-Comey affair most terrifying is how the supposedly “mainstream” Republican Party has reacted. The Republicans of Nixon had some honor left in them; several resigned rather than follow Nixon’s illegal orders, and dozens of Republicans in Congress supported the investigations and called for Nixon’s impeachment. Apparently that honor is gone now, as GOP leaders like Mitch McConnell and Lindsey Graham have expressed support for the President’s corrupt and illegal actions citing no principle other than party loyalty. If we needed any more proof that the Republican Party of the United States is no longer a mainstream political party, this is it. They don’t believe in democracy or rule of law anymore. They believe in winning at any cost, loyalty at any price. They have become a radical far-right organization—indeed, if they continue down this road of supporting the President in undermining the freedom of the press and consolidating his own power, I think it is fair to call them literally neo-fascist.

We are about to see whether American institutions can withstand such an onslaught, whether liberty and justice can prevail against corruption and tyranny. So far, there have been reasons to be optimistic: In particular, the judicial branch has proudly and bravely held the line, blocking Trump’s travel ban (multiple times), resisting his order to undermine sanctuary cities, and standing up to direct criticisms and even threats from the President himself. Our system of checks and balances is being challenged, but so far it is holding up against that challenge. We will find out soon enough whether the American system truly is robust enough to survive.

Why do so many Americans think that crime is increasing?

Jan 29, JDN 2457783

Since the 1990s, crime in United States has been decreasing, and yet in every poll since then most Americans report that they believe that crime is increasing.

It’s not a small decrease either. The US murder rate is down to the lowest it has been in a century. There are now a smaller absolute number (by 34 log points) of violent crimes per year in the US than there were 20 years ago, despite a significant increase in total population (19 log points—and the magic of log points is that, yes, the rate has decreased by precisely 53 log points).

It isn’t geographically uniform, of course; some states have improved much more than others, and a few states (such as New Mexico) have actually gotten worse.

The 1990s were a peak of violent crime, so one might say that we are just regressing to the mean. (Even that would be enough to make it baffling that people think crime is increasing.) But in fact overall crime in the US is now the lowest it has been since the 1970s, and still decreasing.

Indeed, this decrease has been underestimated, because we are now much better about reporting and investigating crimes than we used to be (which may also be part of why they are decreasing, come to think of it). If you compare against surveys of people who say they have been personally victimized, we’re looking at a decline in violent crime rates of two thirds—109 log points.

Just since 2008 violent crime has decreased by 26% (30 log points)—but of course we all know that Obama is “soft on crime” because he thinks cops shouldn’t be allowed to just shoot Black kids for no reason.

And yet, over 60% of Americans believe that overall crime in the US has increased in the last 10 years (though only 38% think it has increased in their own community!). These figures are actually down from 2010, when 66% thought crime was increasing nationally and 49% thought it was increasing in their local area.

The proportion of people who think crime is increasing does seem to decrease as crime rates decrease—but it still remains alarmingly high. If people were half as rational as most economists seem to believe, the proportion of people who think crime is increasing should drop to basically zero whenever crime rates decrease, since that’s a really basic fact about the world that you can just go look up on the Web in a couple of minutes. There’s no deep ambiguity, not even much “rational ignorance” given the low cost of getting correct answers. People just don’t bother to check, or don’t feel they need to.
What’s going on? How can crime fall to half what it was 20 years ago and yet almost two-thirds of people think it’s actually increasing?

Well, one hint is that news coverage of crime doesn’t follow the same pattern as actual crime.

News coverage in general is a terrible source of information, not simply because news organizations can be biased, make glaring mistakes, and sometimes outright lie—but actually for a much more fundamental reason: Even a perfect news channel, qua news channel, would report what is surprising—and what is surprising is, by definition, improbable. (Indeed, there is a formal mathematical concept in probability theory called surprisal that is simply the logarithm of 1 over the probability.) Even assuming that news coverage reports only the truth, the probability of seeing something on the news isn’t proportional to the probability of the event occurring—it’s more likely proportional to the entropy, which is probability times surprisal.

Now, if humans were optimal information processing engines, that would be just fine, actually; reporting events proportional to their entropy is actually a very efficient mechanism for delivering information (optimal, under certain types of constraints), provided that you can then process the information back into probabilities afterward.

But of course, humans aren’t optimal information processing engines. We don’t recompute the probabilities from the given entropy; instead we use the availability heuristic, by which we simply use the number of times we can think of something happening as our estimate of the probability of that event occurring. If you see more murders on TV news than you used you, you assume that murders must be more common than they used to be. (And when I put it like that, it really doesn’t sound so unreasonable, does it? Intuitively the availability heuristic seems to make sense—which is part of why it’s so insidious.)

Another likely reason for the discrepancy between perception and reality is nostalgia. People almost always have a more positive view of the past than it deserves, particularly when referring to their own childhoods. Indeed, I’m quite certain that a major reason why people think the world was much better when they were kids was that their parents didn’t tell them what was going on. And of course I’m fine with that; you don’t need to burden 4-year-olds with stories of war and poverty and terrorism. I just wish people would realize that they were being protected from the harsh reality of the world, instead of thinking that their little bubble of childhood innocence was a genuinely much safer world than the one we live in today.

Then take that nostalgia and combine it with the availability heuristic and the wall-to-wall TV news coverage of anything bad that happens—and almost nothing good that happens, certainly not if it’s actually important. I’ve seen bizarre fluff pieces about puppies, but never anything about how world hunger is plummeting or air quality is dramatically improved or cars are much safer. That’s the one thing I will say about financial news; at least they report it when unemployment is down and the stock market is up. (Though most Americans, especially most Republicans, still seem really confused on those points as well….) They will attribute it to anything from sunspots to the will of Neptune, but at least they do report good news when it happens. It’s no wonder that people are always convinced that the world is getting more dangerous even as it gets safer and safer.

The real question is what we do about it—how do we get people to understand even these basic facts about the world? I still believe in democracy, but when I see just how painfully ignorant so many people are of such basic facts, I understand why some people don’t. The point of democracy is to represent everyone’s interests—but we also end up representing everyone’s beliefs, and sometimes people’s beliefs just don’t line up with reality. The only way forward I can see is to find a way to make people’s beliefs better align with reality… but even that isn’t so much a strategy as an objective. What do I say to someone who thinks that crime is increasing, beyond showing them the FBI data that clearly indicates otherwise? When someone is willing to override all evidence with what they feel in their heart to be true, what are the rest of us supposed to do?

Tax Incidence Revisited, Part 1: The downside of taxes

JDN 2457345 EST 22:02

As I was writing this, it was very early (I had to wake up at 04:30) and I was groggy, because we were on an urgent road trip to Pennsylvania for the funeral of my aunt who died quite suddenly a few days ago. I have since edited this post more thoroughly to minimize the impact of my sleep deprivation upon its content. Actually maybe this is a good thing; the saying goes, “write drunk, edit sober” and sleep deprivation and alcohol have remarkably similar symptoms, probably because alcohol is GABA-ergic and GABA is involved in sleep regulation.

Awhile ago I wrote a long post on tax incidence, but the primary response I got was basically the online equivalent of a perplexed blank stare. Struck once again by the Curse of Knowledge, I underestimated the amount of background knowledge necessary to understand my explanation. But tax incidence is very important for public policy, so I really would like to explain it.

Therefore I am now starting again, slower, in smaller pieces. Today’s piece is about the downsides of taxation in general, why we don’t just raise taxes as high as we feel like and make the government roll in dough.

To some extent this is obvious; if income tax were 100%, why would anyone bother working for a salary? You might still work for fulfillment, or out of a sense of duty, or simply because you enjoy what you do—after all, most artists and musicians are hardly in it for the money. But many jobs are miserable and not particularly fulfilling, yet still need to get done. How many janitors or bus drivers work purely for the sense of fulfillment it gives them? Mostly they do it to pay the bills—and if income tax were 100%, it wouldn’t anymore. The formal economy would basically collapse, and then nobody would end up actually paying that 100% tax—so the government would actually get very little revenue, if any.

At the other end of the scale, it’s kind of obvious that if your taxes are all 0% you don’t get any revenue. This is actually more feasible than it may sound; provided you spend only a very small amount (say, 4% of GDP, though that’s less than any country actually spends—maybe you could do 6% like Bangladesh) and you can still get people to accept your currency, you could, in principle, have a government that funds its spending entirely by means of printing money, and could do this indefinitely. In practice, that has never been done, and the really challenging part is getting people to accept your money if you don’t collect taxes in it. One of the more counter-intuitive aspects of modern monetary theory (or perhaps I should capitalize it, Modern Monetary Theory, though the part I agree with is not that different from standard Keynesian theory) is that taxation is the primary mechanism by which money acquires its value.

And then of course with intermediate tax rates such as 20%, 30%, and 50% that actual countries actually use, we do get some positive amount of revenue.

Everything I’ve said so far may seem pretty obvious. Yeah, usually taxes raise revenue, but if you taxed at 0% or 100% they wouldn’t; so what?

Well, this leads to quite an important result. Assuming that tax revenue is continuous (which isn’t quite true, but since we can collect taxes in fractions of a percent and pay in pennies, it’s pretty close), it follows directly from the Extreme Value Theorem that there is in fact a revenue-maximizing tax rate. Both below and above that tax rate, the government takes in less total money. These theorems don’t tell us what the revenue-maximizing rate is; but they tell us that it must exist, somewhere between 0% and 100%.

Indeed, it follows that there is what we call the Laffer Curve, a graph of tax revenue as a function of tax rate, and it is in fact a curve, as opposed to the straight line it would be if taxes had no effect on the rest of the economy.

Very roughly, it looks something like this (the blue curve is my sketch of the real-world Laffer curve, while the red line is what it would be if taxes had no distortionary effects):

Laffer_curve

Now, the Laffer curve has been abused many times; in particular, it’s been used to feed into the “trickle-down” “supply-sideReaganomics that has been rightly derided as “voodoo economics” by serious economists. Jeb Bush (or should I say, Jeb!) and Marco Rubio would have you believe that we are on the right edge of the Laffer curve, and we could actually increase tax revenue by cutting taxes, particularly on capital gains and incomes at the top 1%; that’s obviously false. We tried that, it didn’t work. Even theoretically we probably should have known that it wouldn’t; but now that we’ve actually done the experiment and it failed, there should be no serious doubt anymore.

No, we are on the left side of the Laffer curve, where increasing taxes increases revenue, much as you’d intuitively expect. It doesn’t quite increase one-to-one, because adding more taxes does make the economy less efficient; but from where we currently stand, a 1% increase in taxes leads to about a 0.9% increase in revenue (actually estimated as between 0.78% and 0.99%).

Denmark may be on the right side of the Laffer curve, where they could raise more revenue by decreasing tax rates (even then I’m not so sure). But Denmark’s tax rates are considerably higher than ours; while in the US we pay about 27% of GDP in taxes, folks in Denmark pay 49% of GDP in taxes.

The fact remains, however, that there is a Laffer curve, and no serious economist would dispute this. Increasing taxes does in fact create distortions in the economy, and as a result raising tax rates does not increase revenue in a one-to-one fashion. When calculating the revenue from a new tax, you must include not only the fact that the government will get an increased portion, but also that the total amount of income will probably decrease.

Now, I must say probably, because it does depend on what exactly you are taxing. If you tax something that is perfectly inelastic—the same amount of it is going to be made and sold no matter what—then total income will remain exactly the same after the tax. It may be distributed differently, but the total won’t change. This is one of the central justifications for a land tax; land is almost perfectly inelastic, so taxing it allows us to raise revenue without reducing total income.

In fact, there are certain kinds of taxes which increase total income, which makes them basically no-brainer taxes that should always be implemented if at all feasible. These are Pigovian taxes, which are taxes on products with negative externalities; when a product causes harm to other people (the usual example is pollution of air and water), taxing that product equal to the harm caused provides a source of government revenue that also increases the efficiency of the economy as a whole. If we had a tax on carbon emissions that was used to fund research into sustainable energy, this would raise our total GDP in the long run. Taxes on oil and natural gas are not “job killing”; they are job creating. This is why we need a carbon tax, a higher gasoline tax, and a financial transaction tax (to reduce harmful speculation); it’s also why we already have high taxes on alcohol and tobacco.

The alcohol tax is one of the great success stories of Pigouvian taxation.The alcohol tax is actually one of the central factors holding our crime rate so low right now. Another big factor is overall economic growth and anti-poverty programs. The most important factor, however, is lead, or rather the lack thereof; environmental regulations reducing pollutants like lead and mercury from the environment are the leading factor in reducing crime rates over the last generation. Yes, that’s right—our fall in crime had little to do with state police, the FBI, the DEA, or the ATF; our most effective crime-fighting agency is the EPA. This is really not that surprising, as a cognitive economist. Most crime is impulsive and irrational, or else born of economic desperation. Rational crime that it would make sense to punish harshly as a deterrent is quite rare (well, except for white-collar crime, which of course we don’t punish harshly enough—I know I harp on this a lot, but HSBC laundered money for terrorists). Maybe crime would be more common if we had no justice system in place at all, but making our current system even harsher accomplishes basically nothing. Far better to tax the alcohol that leads good people to bad decisions.

It also matters whom you tax, though one of my goals in this tax incidence series is to explain why that doesn’t mean quite what most people think it does. The person who writes the check to the government is not necessarily the person who really pays the tax. The person who really pays is the one whose net income ends up lower after the tax is implemented. Often these are the same person; but often they aren’t, for fundamental reasons I’m hoping to explain.

For now, it’s worth pointing out that a tax which primarily hits the top 1% is going to have a very different impact on the economy than one which hits the entire population. Because of the income and substitution effects, poor people tend to work less as their taxes go up, but rich people tend to work more. Even within income brackets, a tax that hits doctors and engineers is going to have a different effect than a tax that hits bankers and stock traders, and a tax that hits teachers is going to have a different effect than a tax that hits truck drivers. A tax on particular products or services will reduce demand for those products or services, which is good if that’s what you’re trying to do (such as alcohol) but not so good if it isn’t.

So, yes, there are cases where raising taxes can actually increase, or at least not reduce, total income. These are the exception, however; as a general rule, in a Pirate Code sort of way, taxes reduce total income. It’s not simply that income goes down for everyone but the government (which would again be sort of obvious); income goes down for everyone including the government. The difference is simply lost, wasted away by a loss in economic efficiency. We call that difference deadweight loss, and for a poorly-designed tax it can actually far exceed the revenue received.

I think an extreme example may help to grasp the intuition: Suppose we started taxing cars at 200,000%, so that a typical new car costs something like $40 million with taxes. (That’s not a Lamborghini, mind you; that’s a Honda Accord.) What would happen? Nobody is going to buy cars anymore. Overnight, you’ve collapsed the entire auto industry. Dozens of companies go bankrupt, thousands of employees get laid off, the economy immediately falls into recession. And after all that, your car tax will raise no revenue at all, because not a single car will sell. It’s just pure deadweight loss.

That’s an intentionally extreme example; most real-world taxes in fact create less deadweight loss than they raise in revenue. But most real-world taxes do in fact create deadweight loss, and that’s a good reason to be concerned about any new tax.

In general, higher taxes create lower total income, or equivalently higher deadweight loss. All other things equal, lower taxes are therefore better.

What most Americans don’t seem to quite grasp is that all other things are not equal. That tax revenue is central to the proper functioning of our government and our monetary system. We need a certain amount of taxes in order to ensure that we can maintain a stable currency and still pay for things like Medicare, Social Security, and the Department of Defense (to name our top three budget items).

Alternatively, we could not spend so much on those things, and that is a legitimate question of public policy. I personally think that Medicare and Social Security are very good things (and I do have data to back that up—Medicare saves thousands of lives), but they aren’t strictly necessary for basic government functioning; we could get rid of them, it’s just that it would be a bad idea. As for the defense budget, some kind of defense budget is necessary for national security, but I don’t think I’m going out on a very big limb here when I say that one country making 40% of all world military spending probably isn’t.

We can’t have it both ways; if you want Medicare, Social Security, and the Department of Defense, you need to have taxes. “Cutting spending” always means cutting spending on something—so what is it you want to cut? A lot of people seem to think that we waste a huge amount of money on pointless bureaucracy, pork-barrel spending, or foreign aid; but that’s simply not true. All government administration is less than 1% of the budget, and most of it is necessary; earmarks are also less than 1%; foreign aid is also less than 1%. Since our deficit is about 15% of spending, we could eliminate all of those things and we’d barely put a dent in it.

Americans don’t like taxes; I understand that. It’s basically one of our founding principles, in fact, though “No taxation without representation” seems to have mutated of late into simply “No taxation”, or maybe “Read my lips, no new taxes!” It’s never pleasant to see that chunk taken out of your paycheck before you even get it. (Though one thing I hope to explain in this series is that these figures are really not very meaningful; there’s no particular reason to think you’d have made the same gross salary if those taxes hadn’t been present.)

There are in fact sound economic reasons to keep taxes low. The Laffer Curve is absolutely a real thing, even though most of its applications are wrong. But sometimes we need taxes to be higher, and that’s a tradeoff we have to make.We need to have a serious public policy discussion about where our priorities lie, not keep trading sound-bytes about “cutting wasteful spending” and “job-killing tax hikes”.