Tax Expenditures: The Invisible Hand of the Government and Runaway Prices

Mettler discussed the concept of the Submerged State and how the government designed policies through tax expenditures (tax credit, breaks and subsidies), to avoid the image of an enlarging government whilst providing social benefits to the people. I will discuss some of the motivation for the government to adopt this approach that has achieved the durability politicians sought, but economic unsustainability that impacts Americans as a whole.

Designing Policies to be Invisible

In her book, Mettler shared that many Americans were unaware that they received governmental support through initiatives such as the Home Mortgage Interest Deduction and Student Loan Interest Deduction. On that front, policies through tax expenditures had created the impression of smaller governmental control following the Great Society period. Instead, these policies worked quietly in the background. The lack of awareness also meant little debate on the matters, thus ensuing durability. For example, the Home Mortgage Interest Deduction had been in place since 1965 despite minor tweaks along the way.

Beyond the debate of creating enlarged or smaller governmental control, policies that work through tax expenditures yield efficiency in the Administration. With an already well-established institution of the IRS to administer tax breaks or credits, there is relative ease of implementation with low administration costs. The policy would also reach every Americans as they file for taxes. Contrasting this to direct policies, where specific agencies had to be established to administer the policies, and policy beneficiaries have to engage with the relevant government agencies. Thus, policies through tax expenditures provide equity in access to the benefits at low administration costs to the government. The flipside is that a lack of dedicated institutions to oversee the policy implementation could result in lack of overview of trends and to exercise control mechanisms to mitigate negative effects of the policies. The lack of overview could also bring about an abuse of the policy.

Policies that utilizes tax expenditures and subsidies worked through the market to provide social benefits to citizens. This has indirect and multiplier effects for the market. Taking the Home Mortgage Interest Deduction as an example: the policy encourages citizens to take up loan to purchase their homes. The resultant effect creates valuable jobs in many industry sectors including construction, transportation, banking, advertisement and so on. Designed properly, such policies develops key industries and become self-sustaining.

Given the various reasons, policies through tax expenditures presented a very attractive approach to politicians, and many presidents have used this approach in some form to push their agendas and initiatives.

Over-consumption and Runaway Prices

Entrusting the market to implement and manage public policies is not without risks. After all, the mission objectives of government and market often do differ. Whilst government seeks to shape social behavior, deliver social benefits and to maximize social value as a whole, industries and corporations seek to maximize value for shareholders. Without clear oversight and regulation, policies through tax expenditures encourage consumption, or worse still, overconsumption. This drives up demand unnecessarily. As the market controls supply, price increases. This is evidence in sharp rises in housing prices, college fees and medical costs at rates higher than inflation since inception of the policy. The increasing cost of living worsen the widening income gap, with the poor becoming poorer. Yet, the tax credits and breaks bring ever dwindling tax receipts for the government to channel funds to help these poor. Removal of tax expenditure could bring in $1 trillion each year that could fund social and other programs directed to target groups. Unfortunately, such policies remain submerged from public scrutiny and faces headwind for any policy review. (609 words)

References:

http://www.irs.gov/taxtopics/tc456.html

http://www.irs.gov/publications/p936/ar02.html

http://prospect.org/article/affordable-care-act-and-submerged-state

http://www.realclearpolicy.com/articles/2013/06/03/the_shadow_welfare_state_533.html

http://www.newrepublic.com/book/review/the-submerged-state-suzanne-mettler

http://www.nextnewdeal.net/dredging-submerged-state-how-democrats-lost-their-nerve

http://www.huffingtonpost.com/2013/10/03/health-care-costs-_n_3998425.html

http://www.huffingtonpost.com/2013/01/04/college-textbook-prices-increase_n_2409153.html

A Review of Policy Design in Mitigating Carbon Emissions - Carbon Tax or Trading

In 2009, the House of Representatives narrowly passed the American Clean Energy and Security Act (ACES) (H.R.2454) by a vote of 219-212. The bill proposed a carbon cap-and-trade system and was seen as US’s answer on its commitment towards climate change to the then upcoming Copenhagen Climate Summit. However, the bill failed to pass the Senate. This paper seeks to review how policy design favored cap-and-trade over carbon tax, and suggests reasons for it failing to be passed.

Carbon Tax: A Penalty to All

Economically, a carbon tax is the most direct and efficient approach to curbing carbon emissions. It directly accounts for the social costs associated with greenhouse gas emissions. A published tax rate provides certainty on the tax amount payable. However, it is uncertainty if the pricing mechanism would effectively reduce emissions.

What is clear with a carbon tax is that it presents a clear message of “You use, you pay”, and a perception of “No Way Out”. Consumers will most likely be at the receiving end as businesses passes the additional costs to them. The carbon tax is also seen as a regressive tax that affects the poor in particular especially when applied to goods such as energy and food which are price inelastic. Businesses could also suffer as they lose the competition in the global economy.

Many overseas countries are facing similar problems when imposing a carbon tax. An example was Australia, where former Prime Minister Julia Gillard’s carbon tax cost resulted in her Labor-Greens coalition government being voted out, and the current government plans to reverse the unpopular ruling. These various factors presents a lose-lose-lose situation, which could explain the lean towards a cap-and-trade approach.

Carbon Trading: Market Driven Approach

The market driven cap-and-trade system provides a “Way Out” for businesses and industries, as companies that are energy efficient could sell their allowances to net emitters. This mimics the Acid Rain program to limit SO2 levels. Market forces manage the pricing, whilst the invisible hand of the government controls by setting the emission limit. Such a cap also provides certainty on achieving the original intent – to mitigate greenhouse emission levels. 

A key issue lies with the amount of greenhouse gases to limit. An overly-high limit poses little effect and drives down the carbon costs, which might disincentive industries to adopt greater energy efficiency, as they choose to acquire additional allowances. Such was the case when the EU introduced its emissions trading program, where a higher emissions limit was set. Conversely, an exceptionally-low limit could artificially inflate costs, affecting costing of goods and global competitiveness. The government would not benefit from a cap-and-trade program if the initial allocation of allowances was free, or “grandfathering”, compared to the carbon tax, which would provide tax revenue that could be channeled to other social and environmental initiatives.

An Elites’ Debate

Through my research, it is apparent that elites and organized interests groups dominated the debates. There were questions on the approach to manage emissions, the social costs to impose, and whether climate change is actually happening. In contrast, the public, whilst generally believing in climate change, have not mobilized towards the cause. The cost-benefit simply does not make sense. The cost associated with the legislation would be too high, with no clear benefit especially when greenhouse emission is a global issue. Why should Americans pay a penalty for their carbon emissions when other countries could freely pollute. Without global consensus, any governmental actions on emission levels would at best be a symbolic gesture, much like the ACES act. That could explain why the focus has shifted towards encouraging greater energy efficiency and renewable energy generation. 

(606 words)

References:

http://www.theguardian.com/environment/2013/jan/31/carbon-tax-cap-and-trade

http://www.lse.ac.uk/GranthamInstitute/publications/Policy/briefingNotes/2011/case-carbon-pricing-Bowen.aspx

http://www.stanford.edu/~goulder/Papers/Published%20Papers/Carbon%20Taxes%20vs%20Cap%20and%20Trade%20-%2015%20Aug%20'13.pdf

http://www.ieta.org/index.php%3Foption%3Dcom_content%26view%3Darticle%26id%3D207:why-emissions-trading-is-more-effective-than-a-carbon-tax%26catid%3D54:3-minute-briefing%26Itemid%3D135

http://beta.congress.gov/bill/111th-congress/house-bill/2454?q=%7B%22search%22%3A%5B%22H.R.2454%22%5D%7D

Legislative Process and its Impact on Lawmaking – A Case Study on Moving Ahead for Progress in the 21st Century Act

The Moving Ahead for Progress in the 21st Century Act (MAP-21), which primarily reauthorize funding for surface transportation, was signed into law by President Obama on June 6, 2012 (P.L. 112-141). This paper seeks to review how the legislative process contributed to the eventual passing of the $105-billion bill by both houses of Congress on June 29, with comfortable margins—373 to 52 in the House and 74 to 19 in the Senate.

Motivations for MAP-21

After expiring on September 30, 2009, the surface transportation program had to be temporarily extended 9 times while Congress debated its reauthorization. This caused uncertainty for states and others that rely on federal transportation funding, and affected transportation planning and implementation with an already deteriorating public infrastructure.

A major issue with the reauthorization bill was the cost, with some people questioning the increase in transportation funding at a time of widening federal deficits. Indeed, CBO estimated that enacting the legislation would reduce budget deficits over the 2012-2022 period by $16.3 billion, but the implementation would lead to discretionary spending of $95.9 billion over the 2013-2017 period. Of that amount, the spending on transportation programs would total $94.3 billion, which reflects estimated obligation levels for 2013 and 2014 that are approximately equal to the obligation levels for 2012, adjusted for inflation. The Senate and the House both sought to consolidate the number of programs in the federal-aid highway program to focus priorities and resources on key national goals, whilst maintaining the same funding level.

The Legislation Process for MAP-21

The federal legislation process took place separately in both houses.

Senator Barbara Boxer [D-CA] introduced bill S.1813 to the Senate on November 7, 2011. The bill seemed to follow a rather Orthodox law-making process. It was referred to the Senate Environment and Public Works Committee. The bill was mark-up on November 9, 2011, and after about 3 months, on February 6, 2012, the Committee submitted the report for consideration in the Senate. What followed was a long process where 317 amendments were proposed and debated. The Senate bill was finally passed with amendments on March 14, 2012 with a vote 74 to 22. Of those who voted in favor for the bill, there were 51 Democrats, 21 Republicans and 2 Independents who were caucusing with the Democrats. All those voted against the bill were Republicans.

Representative John Mica [R-Fl] introduced bill H.R.4348 to the House on April 16, 2012. In contrast with the Senate bill, H.R.4348 took a rather Unorthodox law-making process. Speaker John Boehner referred the bill to 5 committees concurrently: (i) Transportation and Infrastructure, (ii) Ways and Means, (iii) Natural Resources, (iv) Science, Space and Technology, and (v) Energy and Commerce. The bill went to the floor with only 3 amendments, and was passed in 3 days, on April 18. As explained by Sinclair, when a number of committees work on a bill, many perspectives and interests are represented in the bill-drafting process. If the committees come to an agreement among themselves, the supportive coalition for the bill becomes formidable. This is reflected in the vote count of 293 in favor to 127 against.

H.R.4348 was submitted to the Senate on April 19. On April 24, the Democrat-majority Senate struck all clauses of the bill after the Enacting Clause and substituted with the language of S.1813. It also insisted on its amendment, requested for a conference to reconcile the differences, and appointed conferees which included the sponsor for S.1813, Senator Boxer. The House agreed to the conference on April 25 and appointed bill sponsor Representative Mica as conferees, along with several members from the 5 committees which the bill was referred to.

The conference between the 2 houses was held on May 8. Between May 17 and June 21, the House debated through several motions to instruct conferees, and passed instructions that related primarily to funding amount and funding limits. On June 28, the conference report H. Rept. 112-557 was filed. The amended bill became an omnibus bill. In addition to reauthorization of the surface transportation program, the bill included several non-transport related programs including:

1. Set interest rate that pension plans use to measure their liabilities, increase pension premium rates for both variable and flat rate premiums paid to the Pension Benefit Guaranty Corporation, and establish a cap on the variable rate premium

2. Secure Rural Schools and Payments In Lieu of Taxes programs

3. Reduce the additional Medicaid payments to Louisiana that it will receive based on prior declarations of federal disasters

4. Reduce mandatory payments to states that have completed certain reclamation projects on land formerly used for mining

5. National Flood Insurance Program

6. Retain an interest rate of 3.4 percent on all new subsidized student loans until June 30, 2013

7. Raise additional revenue by increasing the ability of businesses with excess assets in their pension funds to use them for retiree health and life insurance benefits, and by defining businesses that make roll-your-own machines available for consumer use as tobacco manufacturers

A careful review of the conference report also showed that for the surface transportation reauthorization, the text essentially was a combination of both the House and Senate bills, focusing on the shared priority of accelerating project delivery. There were also new provisions that will maintain substantive environment and public health protections while streamlining the creation and use of documents and environmental reviews, to enhance the efficiency and accountability in the project delivery process.

On June 29, both houses voted and agreed on the report, with very high margin. The House vote consisted of 373 supported and 52 objected. The Senate vote consisted of 74 supported and 19 objected. Only Republicans objected, largely with concerns on the legislation’s financial aspects, including the use of general revenues transferred to the Highway Trust Fund to make up for anticipated shortfalls.

Cooperation for Bipartisanship Agreement

Sinclair suggested that by employing special procedures and practices, a bill is considerably more likely to pass. In the case of the MAP21 act, these included multiple referral, an omnibus bill and post-committee adjustments where both houses reconciled their disagreements. The Democrat-majority Senate and the Republican-majority House had to work together to ensure that most interests are met in order to push the bill forward. The bill presented the philosophy from both parties: efforts to reduce budget deficit while maintaining current spending levels; streamline processes to cut red tape; demand greater federal oversight and accountability with established performance measures.

When the bills are individually passed in each house, the vote came largely from the majority-party. It is only when the conference report brought all considerations together, that the bill received a near unanimous agreement, from both Republicans and Democrats.

Notwithstanding this, the bill could have been passed due to reasons that could go beyond the legislation process. With a divided Congress and an ongoing Presidential election year, there was pressure for both parties to signal to the public that each party was able to get the job done, even if they had to come to a compromise. This was especially so at the onset of the debt limit crisis in the prior year. The legislation process merely set the stage for both parties to put together all of their interests, and the condition increased their willingness to compromise, to agree. Nevertheless, this is still an extraordinary accomplishment.

(1241 words)

References:

http://beta.congress.gov/bill/112th-congress/house-bill/4348?q=%7B%22search%22%3A%5B%22h.r.4348%22%5D%7D

http://beta.congress.gov/bill/112th-congress/senate-bill/1813

http://cbo.gov/publication/43368

https://www.enotrans.org/eno-brief/map-21-incremental-bipartisanship-at-its-finest

http://thehill.com/policy/transportation/235283-highway-bill-conference-report-released

http://www.asce.org/CEMagazine/Article.aspx?id=25769810182#.U2qIxPl6a9w

Politics of Presidential Unilateral Action

This paper discusses President Obama’s executive order 13616 on Accelerating Broadband Infrastructure Deployment, a proactive policy set to consolidate fragmented regulations towards broadband fiber optics installation in Federal Rights of Way (ROW) by carriers.

The Executive Order for Accelerating Broadband Infrastructure Deployment

On June 14, 2012, President Obama issued an executive order to accelerate broadband infrastructure deployment. Specifically, the executive order formalized the setup of a working group comprising various government agencies, such as the Departments of Agriculture, Commerce, Defense, Interior, Transportation, and Veterans Affairs, and the US Postal Service to establish federal broadband procedures and requirements, and a uniform process for contracts and permits on federal lands for broadband carriers to lease Federal assets for broadband deployment. The working group is also tasked to enable the deployment of conduit for broadband facilities during highway construction, as part of the “dig once” initiative to reduce the frequency and costs for digging the highway. The executive order also calls for federal assets and leasing requirements to be posted on agency websites, and enable public tracking of broadband deployment projects through the Federal Infrastructure Projects Dashboard.

Rationale for the Executive Order

President Obama’s administration recognized the important of broadband accessibility. They see broadband access as an essential tool to improve the global competitiveness of United States. However, a proportion of the population lack adequate access to broadband, either due to unavailability of such services, or current installations were unable to keep up with growing traffic volumes due to increased use of mobile devices. Expanding access and upgrading services would require new infrastructure deployment.

The federal government owns approximately 30% of US lands and owns or leases approximately 10,000 buildings nationwide, many of these provide excellent pathways for broadband infrastructure. However, broadband carriers seem to face significant challenges when working to secure access to federal ROW or buildings to deploy broadband infrastructure. The structure and language of the executive order suggested that the current federal system is overly fragmented with many different agencies, each with its own set of rules. There seems to be very little inter-agency coordination, and possibly contradicting rules that inhibits broadband deployment.

Proactive Policy Making

President Obama and his administration realized that to boost broadband deployment, there is a need to reduce the barriers for companies to install broadband infrastructure on Federal properties and roads. There was a serious need to streamline and harmonize federal regulations and standardize controls, thus making the government more efficient. This would bring about benefits such as cost-savings for private industry and broadband users. However, there is no one single lead agency that takes charge of leasing Federal ROW. It was unlikely that Congress would table this as a governmental agenda, with looming income inequality amidst a stagnating economy.

As the nation’s leader, President Obama had to give a push to various federal agencies to come together to recognize and rectify the issue. By issuing the executive order, President Obama forced the various federal agencies to do just that, through improving government efficiency and providing information on public infrastructure projects to the public. The goal to improve government efficiency also mirrored executive order 13563 on Improving Regulation and Regulatory Review. The provision of information would help carriers time their deployment to periods when streets are already under construction, minimizing the number of re-digging works, and hence the overall construction time, costs and inconvenience.

Since the issuance of the executive order, a GIS mapping tool and inventory of broadband resources were created to assist carriers in broadband deployment. The Federal Highway Administration also published a report on successful broadband deployment in highway ROW.

(598 words)

                                                  

Redefining use of marijuana & its impact on public policy

In this post I will be discussing how the use of marijuana changes from a valence issue to a non-valance issue. 

Do Marijuana Use Lead to Social Problems?

Marijuana is a Schedule I drug under the Controlled Substance Act (1970), one that the federal law recognizes as having high potential for abuse with no medical use, and is not safe to use with supervision by medical practitioner. Before this classification, marijuana has long been subjected to strict restriction in its cultivation and distribution from the early 1900s. The image of marijuana use was most drastically criticized since the 1930s, when Harry Anslinger headed the then Federal Bureau of Narcotics. He sought to get rid of all drugs and spread claims in his anti-narcotics propaganda on the harmful effects of drug abuse on society, ranging from violent crimes and sexual offences. Such an image had been ingrained in society that the use and abuse of marijuana is bad, and the government is responsible in resolving this valence issue. 

Whilst the public generally accepts the fact that marijuana abuse is wrong, it is not the same with marijuana usage. Baumgartner & Jones had discussed on the inadequacy of statistics and reliable data. There has not been reliable data indicating that marijuana usage would lead to abuse, that all users are abusers. Nor are there data that directly link controlled marijuana usage to social problems. Most data on crime rates are at best proxies to relate to drug abuse, but not drug use. The lack of explicit and conclusive evidence that marijuana use contributes to social problems makes it harder to define it as a social problem itself.

Separately, research on the medicinal value of marijuana had demonstrated its potential to help various groups of patients such as epileptic children. The need to protect the young and vulnerable had stirred a public response that warms up towards more medical research on marijuana. Marijuana is no longer seen as a social problem, but a medical solution. However, the federal law prohibits medicinal applications of marijuana as well, leading to greater tension, none so far as the legalization of medicinal marijuana use in 20 states, with more states looking to relax rules pertaining to some medicinal use of marijuana as well. This showed that the public no longer see marijuana use as a valence issue that requires governmental intervention.

Federal Dilemma in Relaxing Rule on Marijuana Use

Legalizing medical and recreational marijuana usage by the states, despite knowing that federal law is against it, is a way for electorates to send a message to the Obama administration to relax the laws on marijuana. Yet, President Obama and his administration did nothing to change the federal law. Perhaps, it is a legacy issue from past presidents and the DEA that proves to be too difficult to overturn for political reasons. It could also be that the absence of reliable data that marijuana use would not lead to abuse forces Congress to be cautious in any relaxation, to keep to the known-knowns.

The bottom line is: there is no real incentive for the federal government to open the Pandora’s Box to legalize marijuana, only to have the law reinstated in the future, or being forced to legalize other drugs. Such actions could show incompetence of the current administration which would be politically bad to the administration. Thus, it is not surprising that President Obama chose inaction, and even granted selective medical research. This proves that the federal government has recognized that marijuana use is no longer a social issue, but a political one.

(596 words)

The Politics of Fracking (aka Hydraulic Fracture)

Modern living depends greatly on the availability and accessibility of energy. Energy provides the comfort and convenience to sustain our quality of life. More importantly, energy drives the economy to create wealth for people and nations. As such, countries are obsessed with seeking cheap and easily available sources of energy. Albeit a looming climate issue, energy consumption increases as population increases, and the lack of cost-effective and consistent renewable energy source means that mankind would still be burning fossil fuel to generate electricity, often at the expense of the environment. This is true in any country, including the United States.

As crude oil prices increase to new heights since the mid-2000s, coupled with ever improving oil-drilling technology, previous uneconomical solutions becomes economical. One such technology is hydraulic fracture of shale rocks, or fracking. Technology improvements and high oil prices propelled it as a new cost-effective solution for natural gas mining in previously unrecoverable shale rocks. With increasing oil prices, a Downian mobilization began to support the fracking activities resulting in increase in domestic natural gas supplies.

Fracking to produce shale gas enters into an “iron triangle” of sorts, not unseen in previous energy crunch times where congress had to relook at options to secure energy supply. Despite the unknowns in terms of environmental impacts from fracking, the Energy policy was amended in 2005, including favoring fracking activities. This includes the exemption for fracking under several federal laws, such as the Clean Air Act, Clean Water Act, Safe Drinking Water Act, National Environmental Policy Act, Resource Conservation and Recovery Act, Emergency Planning and Community Right-to-Know Act, and the Comprehensive Environmental Response, Compensation, and Liability Act. In addition, there was little congress oversight in licensing and controlling the rate and extent of fracking, as observed by Brady. Much of the regulation was delegated to individual states. This resulted in a rather fragmented regulation that differs from state to state. Whilst New Jersey had banned fracking altogether, many states allow fracking in areas which do not affect drinking water supplies.

The increasing fracking activities to increase US domestic oil and gas production is changing the country’s landscape. “Cities” are popping up in the middle of nowhere, with settlements established for the sole purpose of cracking shale rocks to produce oil and natural gas. With increasing operations, there is also increasing publicity. A great public concern was the unknown effect of fracking to the quality of underground water sources. The key issue resides with the cocktail mix of water, sand and chemicals used to fracture the shale rocks. Many of the chemicals used were harmful or carcinogenic, yet they are often considered “trade-secrets” amongst the oil and gas producers. It is unsure if fracking operations could pollute underground waters that end up in the water mains, or flow to the rivers after treatment. Environmentalists were also hailing that fracking resulted in release of methane gas, which is more harmful that carbon dioxide towards global warming.

With greater public scrutiny, and greater uncertainty, the image switches from enthusiasm to criticism. This is shown in public opinion polls, from over 50% public acceptance in 2012 to under 50% public acceptance in 2013, report by Pew. From such swinging support, we are seeing the tipping of the scale, as fracking began the transition from Downian to Schattschneider mobilization, and a Conflictual policy network forming. The Environment Protection Agency has been called upon to do their job, monitoring water safety and air pollution. 

Minimum Wage Agenda Emergence

The issue on minimum wage has been a hot topic in the Obama’s administration, raised during both the 2013 and 2014 State of the Union addresses. The proposal to raise minimum wage from the current hourly rate of $7.25 to $9 (in 2013) and $10.10 (in 2014) presented an urgency to mitigating the ever widening income inequality within the United States.

A problem stream as defined by Kingdon, the issue on income inequality has been widely debated from time to time. Whilst other measures such as tax credits and relief were introduced, they did not effectively reduce the widening income gap. As reported by the Economist, the United States has the highest GINI coefficient compared to all other highly developed countries. The inequality was worse in certain states, many of which were Democrats-held districts, as reported by the Atlantic. The situation is a stark difference from the promises made by President Obama during his campaign where he wanted to uplift the middle-income, when many workers earning the current minimum wage were living below the poverty line. Many Americans recognized that income inequality is a problem, somewhat of a National Mood as described by Kingdon, and are in support of raising the minimum wage.

Conversely, the income inequality issue could potentially be detrimental to the political standing of the Democrats, as they might be seen by the constituents to be ineffective in delivering their promises. This provided a political will amongst Democratic leaders to pursue a solution to the problem stream.

When President Obama discussed the issue on raising minimum wage as a policy solution in his 2013 State of the Union address, he effectively placed the issue on the governmental agenda. This prompted debates between the two parties on the pros and cons of this upward revision. Whilst the situation remains dire, the two parties seemed to remain locked in horns. With the 2014 House of Representative elections looming, there is a coupling of the problem stream with the political stream that is pressing President Obama and the Democrats to act on this. The issue was deemed urgent enough that President Obama had raised the minimum wage for federal contract workers amidst the legislator inactivity, as reported by Digital Journal.

Following President Obama’s 2014 State of the Union address reiterating the need to raise minimum wages, political entrepreneurs such as Senate Majority Leader Harry Reid and Senator Tom Harkin of Iowa, had taken to task to draft the minimum wage bill and upgrade it to the Decision agenda. The 2014 address, together with the coupling of the problem and political streams, presented a policy window to quickly table the bill, despite reports that the Democrat leaders had yet to receive sufficient support from the Republicans to pass the bill. Despite so, the Politico reported that the Senate is expected to vote on Harkin’s bill as early as this week.

Whilst it is still uncertain if the bill would pass the Senate, the debate on minimum wage revision presented a policy alternative to mitigate the income inequality issue. Equally uncertain was whether the bill would remain on the governmental and decision agenda after the 2014 House of Representative elections. From my research, I recognized that there are many policy alternatives, levers and platforms (including state-level minimum wage reviews) which legislators could and had used. Raising minimum wage is but only one solution to tackling the issue on income inequality, albeit a direct one that could instil a “feel good” to employees, even when it is uncertain of the actual net pay increase or effectiveness in overcoming income inequality.

(597 words)