One of the biggest welfare programs in America is the mortgage interest deduction. People who are wealthy enough to purchase a house are given thousands of dollars every year to pay for that house. Of course, almost no one sees it as welfare because — like most welfare for the more affluent — it is designed to be invisible. We can’t have upper income people think they are getting welfare; that would be rude! So when I talk to people about the issue, they have a hard time seeing the reality of it. So let me provide a simple example.

Imagine you are I live next door to each other. We have identical lives: household size, income, the whole deal. But there is one difference: I own my home and you rent. As a result of this, I pay substantially less in taxes than you do. We both make $100,000 per year. My federal income tax bill is $20,000 and yours is $23,000. We have the same income and expenses. We should both be paying $23,000. So effectively, the government is sending me a check for $3,000. The mechanism by which this happens — giving me some of my tax money back as opposed decoupling it from the tax system — doesn’t matter in the least.

A couple of business professors, Stephen Cecchetti and Kermit Schoenholtz, wrote a paper, Why the Mortgage Interest Tax Deduction Should Disappear, but Won’t. They noted that economists don’t like the mortgage interest deduction. The main problem from an economic standpoint is that it distorts the natural flow of capital. By the government making home purchases cheaper, capital that would normally go to other parts of the economy gets diverted. But even more than that, the mortgage interest deduction increases inequality. Yet we are stuck with it for a number of reasons.

The biggest reason is that roughly 50 million households currently have mortgages and they are not keen to lose out on their welfare checks, even though they probably don’t think of them that way. But in addition to this, there are lots of people who feed on this: real estate agents, bankers, and home builders. And even more, getting rid of the mortgage interest deduction would cause house prices to fall — hurting every homeowner in the nation. According to Cecchetti and Schoenholtz, it would represent a loss of $4.1 trillion — comparable to the cost of the bursting of the housing bubble: $6.4 trillion.

But Cecchetti and Schoenholtz have a good idea for making the mortgage interest deduction less of a problem. They suggested putting a maximum mortgage value that one could deduct at $400,000. They noted that currently, 90% of US homes are worth less than $500,000. This would have the effect of reducing some of the bad economic signals with the deduction by not subsidizing vanity homes. But it would also make the deduction less inequality expanding by not allowing the government to subsidize more and more the richer the home buyer. The Center for Budget and Policy Priorities also has an idea for making the system better, Fixing the Unfair Mortgage Interest Deduction.

The point of all this is that something can be done to make the mortgage interest deduction more fair and less disruptive in the economy. But I doubt we are going to see much. Eventually, the government may see that there is a bunch of money to be had. We’ll see if that leads to improved policy. For me, I would just appreciate recipient of the mortgage interest deduction understanding that they are getting welfare.

Matt Yglesias has an amazing ability to summarize complicated issues simply. Last week, he wrote, All Politics Is Identity Politics. He noted that people generally define “identity politics” as those of race or gender — and increasingly sexual orientation. And he summed up his point with two simple but powerful sentences, “The implication of this usage is that somehow an identity is something only women or African-Americans or perhaps LGBT people have. White men just have ideas about politics that spring from a realm of pure reason, with concerns that are by definition universal.” Yeah, that’s about right.

This is the essence of “white male privilege” — at least as far as I’m concerned. There are other elements to it of course: having an easier time finding a job and not having police think the default way to deal with you is to kill you. But the fundamental issue is the invisibility of whiteness and maleness. If you are a white male, you are an individual in our society. If you are a woman or a person of color, you are seen through the prism of your membership in a particular group. And that’s what’s so great about Yglesias’ observation. The “identity” is not about the individual; it is about the label that the society broadly places on the individual.

Yglesias goes on to highlight complaints about Bill de Blasio focusing on racism in New York City policing. He noted that not focusing on this is as much of a choice as focusing on it. But we see this kind of thing all the time. Allowing corporations to continue to illegally bust unions is considered somehow morally neutral in a way that doing something about this illegal activity (which the federal government has ignored for four decades now) means siding with one side. Implicit siding with the corporations is oddly considered not taking a stand.

Here is where it is really helpful to be identity invisible. Let’s suppose that it is the 1970s and you get cheaper housing because you aren’t black. You have the luxury of thinking the status quo is “natural.” You aren’t getting a lower interest rate on your mortgage; you are getting the just interest rate. And those African Americans are asking for laws that apply specifically to them — because of their identity. That’s so not you because you aren’t asking for anything because of your identity. Because you are already getting it by default.

Yglesias summed up the situation perfectly:

Ultimately, this is all about who sets the parameters of the debate. This is why I have little tolerance for all the whining about the “new political correctness” and things like that. At core, it is all about powerful people claiming that their their power is being challenged. The great thing about privilege is not having to ask for special rights. But that doesn’t mean the privileged don’t still ask for them.

The pollster J Ann Selzer wrote a very interesting article over at The Des Moines Register, Selzer Score Helps Bring Order to GOP Herd. It tries to get a handle on what will happen in the Iowa caucus. The issue is that caucuses work in a more “hands on” way and so there is jockeying for support during the caucus. The Democratic process is even more interesting in that only candidates who get at least 15% of any given caucus’ vote are allowed; so if someone votes for, say, Lincoln Chafee and less than 15% of the people there vote for him, they will have to switch to their second favorite candidate. The Republican caucus is more straightforward, but the same kind of thing will happen. And over time, this is what happens in the overall election as the weaker candidates drop out.

So Selzer put together a system where she looks at voters secondary choices. She uses three components. First, she gives double weight to people’s first choice. Second, she gives regular weight to people’s second choice. And third, she gives half weight to whether they would ever consider voting for the candidate. It’s a clever scheme. But I don’t see any reason to believe it. The results say far more about the model than about reality. Still, there is some explanatory value in the exercise.

What I think is most interesting are just the numbers of people who would consider even voting for different candidates. That to me seems like a reasonable way of looking at the long term potential of each. Obviously, these opinions can change. But it is hard to take serious a candidate that 58% say they would never vote for. I’ve taken Selzer’s data and put it together in the following chart:

Let’s start by discussing the second column: Consider. This is the percentage of people who say they would consider voting for the candidate. Donald Trump is a great example. He clearly is a non-starter as a viable candidate, but he still has 4% of the vote in terms of first choices. As Selzer noted: “enough to rank him in the top 10.” And that means it is enough to put him in the first presidential debate. Yet only 34% of those polled say they would ever vote for him. Similarly, Jeb Bush just makes it into the top ten by this accounting.

The third column provides an important caveat. It is the total “Consider” column plus the number of people who said they didn’t know. This provides some insight into people who might get some traction as they make their way through the campaign: Bobby Jindal, Carly Fiorina, and John Kasich. But that speaks really poorly of Jeb Bush. By this accounting, he comes in 12th place — only a bit ahead of George Pataki! There are also people like Ben Carson who lots of Republicans think they know because he’s gotten so much attention on Fox News. But I think in an actual election, he’s going to show himself to be the political amateur that he is, and his numbers will come down accordingly.

The Republican Party would be smart to look at something like this for their debates. It has the advantage of weeding out two of the most embarrassing candidates: Donald Trump and Chris Christie. Just the same, there is plenty of crazy getting high scores: Carson, Huckabee, Cruz. I don’t understand why Republicans think so lowly of Trump (42%) and so highly of Cruz (80%). But given that there isn’t much in terms of ideological difference between “establishment” candidate Scott Walker and “crazy” candidate Ben Carson, maybe there isn’t anything to understand. Maybe it’s just random.

For years I’ve been arguing that Greece should exit the Euro. Partly, this is axiomatic for me. A shared currency was always a bad idea. And the way it has played out is that Germany — as the dominant economy on the Euro — has almost total power. And Germany — as it has for the last hundred years and more — has abused that power. It’s nothing personal against the Germans. Truthfully, I just assume that the Germans will act like Americans and I’m never disappointed — which is to say that I am always disappointed but never surprised.

So I have never thought that Greece would get a fair deal. It’s really simple: the Greek government screwed up. Unlike the other European countries that got into trouble, it was culpable. And given that, Germany and the other countries were going to have to show Greece mercy. Fat chance with that. So I always thought that it was a matter of Greece exiting the Euro early or exiting it late. And once you conclude that, it really doesn’t make much sense to torture yourself for years while putting off the inevitable. If Greece had exited in 2010, it would have taken a year or two to get back on its feet. If it does it now, it will take a year or two to get back on its feet.

Matt Yglesias, surprisingly, thinks that Greece doesn’t have much bargaining power right now, Greece Is in Crisis (Again), and Here’s What You Need to Know. He argued that if Greece exits the Euro, it would actually hurt the moderate parties in the rest of Europe. But why does that matter to Greece? This should be the great concern for the European establishment. If Greece exits the Euro and manages to do well within a couple of years, this will embolden more extreme parties in other countries. Many of those parties are not too nice. That provides a great deal of incentive to the rest of Europe, if only it were worried about, you know, World War III as much as it was worried about bankers losing a bit of money.

Yglesias has an answer to my concern, by responding to — of all people — Josh Barro. Barro has been saying the same things I have, “Doesn’t Greece need to leave the Euro for the same reason everyone needed to leave the gold standard in the 1930s?” Yes, it does! It needs to lower the value of its currency. And, “I get it: transitioning off the Euro would be very very painful. But not transitioning off also looks very very painful!” But Yglesias’ response to this again makes me scratch my head. He puts forth the European project as one to minimize conflict — to avoid World War III, if you like. And he noted Greece had previously been mired in civil war. But again I say: isn’t this a bigger issue to Europe than to Greece? Isn’t this the reason that the Germany and the rest should really want to make a deal with Greece?

Yglesias does mention an idea for keeping Greece in the EU that was proposed by Wolfgang Münchau. It sounds reasonable. But then most of what Greece has proposed has sounded reasonable. It doesn’t seem to me that it has been Greece that has stood in the way of a deal. If Münchau’s idea was reasonable, why didn’t the more experienced bureaucrats of the EU push it? I think the reason is clear enough. The European Union Commission is really not interested in doing what is best for the people of the EU. They are focused on the interests of the power elite. And like such people everywhere, they have pushed their financial interests to the point where they may end up hurting themselves.

The people at Crooks & Liars do a great service to the world by watching a lot of television and reporting back to the rest of us who are too sensitive to deal with it. And on Sunday, John Amato caught a little bit of video from Fox News Sunday, Chris Wallace Smacks Rick Santorum on Flat Tax Myth That Helps the Rich. Unlike most liberals, I have a bit of a soft spot for Santorum because he really does have populist instincts. He says the right things about economics and the middle class. Of course, his policy ideas are horrible — never getting outside the Republican bubble.

On Sunday, we learned his proposal for “reforming” the tax system. Wallace laid out the basics, “You wanted only two income tax rates, 10% and 28%. Tax capital gains at 12%. And corporate taxes at 17.5%.” And then he went on to quote a Tax Policy Center report that showed that the tax cut would be highly regressive and would cut total federal tax receipts by 40%. Santorum just blows off the first criticism. He uses the old Milton Friedman line about how it would be good for the lower classes too. Even if that were right, it wouldn’t change the fact that the cut is regressive.

But Santorum’s response to decimating the federal government’s budget was a classic, “Well, first off, those numbers are based on a static model. That means that nothing is going to change in the economy if you create all sorts of incentives for people to grow the economy and for people to work with lower tax rates.” That’s just the old supply side argument: if you give rich people tax cuts, they will invest it and create a bigger economy and that will replace the lost revenue. This has literally never happened.

The fundamental problem here is that the government spends tax dollars just as much as individuals spend money that isn’t taxed. Conservatives like Santorum seem to think that there is some special sauce that makes money spent by the private sector better than money spent by the public sector. It makes no sense at all. What’s more, since the rich have more control of their own salaries, the lower their taxes are, the more incentive there is for them to keep more of the profits of business and to share less with workers.

We don’t need to deal with the lack of revenue, however. The truly vile part of Santorum’s plan — and really, pretty much every Republican plan — is that it hurts the poor in an absolute sense. First, of course, these tax schemes always come with a big push to savage aid to the poor. But more important, the federal income tax is the only tax in the United States that is moderately progressive. This is why Republicans are laser focused on it. The biggest federal tax for most people is the payroll tax and it is absurdly regressive. But no Republican is at all interested in doing anything about it, because it is the kind of tax they believe in: flat up to a hundred grand and then zero for everything above that. And nothing at all on capital gains!

But the poor are also harmed on the state and local levels. These taxes tend to be flat and even regressive. And if federal funding for the states dries up, the states will be forced to raise their taxes — shifting the total tax burden even more toward the poor. This is the end result when Santorum says, “The whole idea is to treat everybody fairly.” But that’s just because he’s a liar. He doesn’t care about treating people fairly — at least not enough to think through his tax “reform” ideas. And this makes him a typical Republican. They are never interested in looking at taxes overall. They are only interested in looking at the taxes that the rich pay.

I’ve always found newspaper rundowns of police activities strange because they mention who had been arrested. In a country that prides itself on the fact that people are “innocent until proven guilty,” such public shaming seemed anathema. Everyone assumes that people who are arrested are guilty of something. So printing arrestees’ names in the paper is a form of punishment without due process. I seem to be alone in thinking this. But the issue seems ever bigger as it changes from one name printed among many in a local newspaper to one name delivered globally to anyone who plugs it into a search engine.

This is just the very edge of a larger issue of criminal background checks for employment, housing, and even more trivial things. Gilad Edelman wrote an excellent article about the subject in the new issue of Washington Monthly, Second Chance, My Ass. It is nominally a review of the book, The Eternal Criminal Record. But it serves as a good primer about the issues that people with criminal records face in our hyper-connected country. It’s really disturbing. In 1996, only 50% of all companies did background checks on some new hires. Today, 75% of all companies do background checks on all applicants — and 90% do background checks on at least some.

Looking at these numbers, you might wonder how companies got along before. And remember: 1996 is far into the computer revolution. So if we go back to 1960, we are probably talking virtually no one but the CIA doing background checks. And I think this is the critical issue: background checks do not result in companies having better workers. Companies do background checks because they can. They are used as yet another tool to weed out candidates. And when you consider 12% of all Americans have felonies — not to mention those who simply have misdemeanors or simply arrests — it works really well!

I’ll tell you when companies did not do criminal background checks: during the dot-com bubble in Silicon Valley. Companies were so desperate for any people who could do the work that they didn’t care. That was a heady time. All other times in my working life, I’ve been struck with the fact that employers were not terribly interested in getting work done. Interviews were more about fitting in and being the kind of person who wouldn’t upset anything — ever. I discussed this in, Unstable Weirdos and Business Success. The point is that the modern American corporation seems more like a social club than a business.

This is why the use of criminal background checks and similar “weeding out” strategies are so pernicious. They really have nothing to do with business. They are just ways of keeping the poor down — maintaining existing social barriers. I mentioned that 12% of Americans have felony records: 25% of African Americans have felony convictions. As Michelle Alexander discussed at length in The New Jim Crow, this is the modern way to keep a whole race down.

In Europe, things are different. There are laws to protect individuals’ rights to privacy. But according to Edelman, the Supreme Court has found that in order to have transparent government, criminal records must be available to all. Think about that for a moment. According to the Supreme Court, we don’t need to know the people who can spend unlimited amounts of money on political candidates, but we do have to know every arrest and conviction of every individual in the country. But I have a hunch that this is not just a matter of legality. In my experience, employers from Europe and Asia are simply far more focused on getting the job done than they are on the misty-eyed nonsense that Americans focus on.

There is some good news, however. More and more places are making it illegal to ask job applicants if they have a conviction until after the job interview. This is a big deal. It is generally illegal to not hire someone on the basis of a criminal conviction. So what most employers do is simply never interview people who say they have conviction. If an ex-con lies, the employer declines to hire not based upon the conviction but rather because the applicant lied. So this is a good change. But, of course, we could and should do so much more.

Because of television and movies, most people have a highly unrealistic idea of the criminal justice system. They think that people go off to prison and so pay their “debt to society.” That could not be more untrue. The fact is that the society expects the convict to go on paying that debt for the rest of her life. And it is all in the name of making society itself worse. Edelman quoted some work from our friends at the Center for Economic and Policy Research (I assume she’s referring to this: Ex‐offenders and the Labor Market.) who find that keeping ex-cons out of the labor market costs the economy roughly $60 billion in output per year. But maybe that’s a small price to pay for this extra tool that allows managers to only ever have to manage workers who went to the same strata of colleges they did.