Turbotax and rot in the US political system

Whether you think government can fix the woes of humanity, or think that government is the cause of said woes; there is one thing that almost all people in the US agree with; something is wrong with our government.

Why does the US perpetually seem to be at war? Why is it broad parts of the US don’t have access to high-speed internet? Why is wealth inequality increasing? Why do we have to manually file our taxes? Why does it seem like rich people manage to not pay taxes? It seems impossible to make to any change, no matter how simple; if one interest group stands to lose a lot, and a great many people will stand to gain a bit. A couple examples:

TurboTax: The worst company on earth

My favorite example of anti-people interference by an entrenched party comes from turbotax, the worst company on earth. Propublica’s piece on this is far more complete than mine, but I’ll boil it down for ya. In most developed countries, filing of taxes is free (duh), and in some countries it doesn’t require the intervention of the average person (aka it’s automatic).

In the US, the average person will spend eleven hours filing their taxes. For half the people in the country, their primary sources of income are their job, and bank interest, which is information that the IRS already has, and your taxed income is already automatically withheld. So why can’t we have a free, automatic system? It pretty entirely rests on two companies, Intuit (Turbotax), and H&R Block. These companies spend millions ever year preventing free/automatic filing under the guise of the lobbying firm “Free File Alliance” (classic lobbying shit).

In 2005, California had a trial program in which the IRS prepared the documents for people, and they could choose to modify if desired; it was 98% percent popular (almost nothing is 98% popular). If the most populous state passed a program like this, it would surely lead to other states adopting similar laws in the future; thus improving the lives of many.

It was close to becoming law, votes away in the state legislature, and TurboTax spent 2 million on lobbying efforts, and flipped one vote at the last minute (linked is a great podcast on the topic). Since then they have lobbied against every effort to simplify the tax code, and they remain the most popular filing software. (Just a note, they are now legally required to provide free filing for some people, but this service tends to be undersold, and other “free” services that will require paying later or starting over tend to be advertised.)

The CEO of TurboTax is worth 3 billion dollars. The smiling faces you see on TV telling you how easy it can be to file your taxes with H&R Block, or Turbotax, are the reason that you have to file taxes at all. Just remember this year when you’re on TurboTax filling in information that the IRS already has. On behalf of America: fuck you TurboTax.

Want fast internet in a rural town? Fuck you

One more, the broadband internet example. Many small cities are not served by cable companies that have any real competition and thus no incentive to improve their service. It is not profitable for internet companies to improve service to rural towns, when those people have no way out. Because of this, up to 162 million Americans do not have access to broadband speed internet.

Some towns decided to take matters into their own hands, and lay fiber optic networks themselves. Small municipal governments read about how to do this, did the work, and sold the service to their constituents. It is pretty astonishing that a small town public works department could piece together how to lay a fiber optic network, and execute on it. But for internet companies, there’s a problem.

They stand to lose money if people have an option out of their shitty, entrenched system. So, they took to lobbying (another good podcast on the topic). Now, 22 states (dropped from 25 in 2019) have laws to prevent municipal governments from providing internet to their citizens. Some of these small towns had already set up the networks and had very happy citizens, which they had to shut down after the cable companies brought their high paid lawyers with pre-drafted legislation. Awesome.

The rest of the story

It is easy to look at these small scale issues and see the problem, but it gets worse and harder to pin down when you scale up.

Larger scale and more insidious examples include our defense lobbying industry, health industry, banking lobby, and energy lobby. These entrenched interests have resulted in a system that continuously grants large defense contracts to donors like Raytheon, whose weapons the US happily uses to topple governments in third world countries. The federal reserve lends money to banks at 0% interest, which banks turn around lend to citizens with interest (free money anybody?). The US government refuses to seriously consider a public option for healthcare when it is supported by 70% of the American public. And the government works to shut down nuclear plants to replace them with with more profitable and dirtier methods of producing energy. Democrats and republicans get approximately equal amounts of big donations, so it isn’t party specific.

Why does money matter more than votes?

How does this system work? Well, to start out it is really expensive to run a campaign. A successful house race on average costs $1.4 million to run, and a senate race costs $9.8 million. These campaigns are largely funded by PACs, large donations, and the funds of wealthy candidates (who can pay themselves back with donor money after a race.)

This money largely goes to incumbents, who almost never lose. Small donors make up a small (but not insubstantial) proportion of political money (~10%). You can’t buy votes, but name recognition is a huge part of getting on the ballot. If it wasn’t than political spending wouldn’t have such a huge impact on odds of winning. People generally don’t do much independent research on candidates before stepping into the ballot box. Having your name out there is a requirement to get a win, and grassroots campaigns are an exception, not the rule. Individual campaign contributions are limited, though, and capped at 2,000-5,000 depending on the race.

SuperPACs are not limited in their “campaigning”. These arose largely from the 2010 supreme court decision; citizens united. These groups are not required to disclose their donors, and in 2010 spent 2:1 in favor of republicans, which is credited with their largest success in beating incumbent democrats since 1948. (Don’t worry, democrats have since caught up). Donations to these organizations are not limited, and tens of millions of dollars flowed into running negative political ads, from shadowy and undisclosed donors and companies. There is a stipulation that the superPACs are not allowed to coordinate with the candidates, but the enforcement agency (the FEC) is relatively toothless and does not bring many cases.

As a side-note: opensecrets.org is an incredible resource on the topic of money in politics and I implore you to check it out.

How does this support get turned into legislation? The revolving door of Washington, deep state, swamp, all names with varying levels of political toxicity that speak to the same thing. Fundraising is virtually nonstop in Washington, and dinners and speeches are put on to give financial backers direct access to politicians.

Ex-congress people pivot into consulting positions as soon as it is legally possible, and make salaries about 10x higher than what they made when they were “representing” the people. The interested parties show up to fundraisers year round with fat wallets, and schmooze. When it comes time to consider some legislation that might negatively financially impact their donors, you know they’re going to think twice. Given the need for huge amounts of money to stay in office, the fear of losing donors to a potential challenger in their election is a powerful motivating force to stay in line.

A review looking at whose interests decide policy yields the unfortunate result:

“The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.”

The Trump Digression: Read at your own risk

Knowing that the subject is pretty alienating, I thought pretty hard about whether to include this or not. It was not the intention when I started writing this essay, but was motivated by what I’ve seen on social media / media since the rioting at the Capitol. I do think it’s an important point. To start off I want to make it perfectly clear, I did not vote for Trump in 2016 or 2020. I think if you voted for him in 2020 you’re crazy, but my perspective on his 2016 victory has changed (still wouldn’t vote for him).

Trump won in 2016 because he was the only person to acknowledge the above system. His messaging on “draining the swamp” spoke to something deep in many Americans; the knowledge that they’re getting screwed over. His calling out of the Bush's lying America into a pointless war in Iraq on live TV was truly astonishing, and in the debate with Clinton he pointed out that he had previously used the system to buy influence with her.

For decades, the system set up by the government has enriched very few people at the expense of most of America. Make America Great Again is a call to slide back on the x-axis of the above graph, where normal people could live a dignified life. Seeing the below meme carries different weight when its contextualized.

I (very delicately) want to touch on the immigration / race rhetoric. To win over his base, Trump has said some racist stuff and appealed to basal human in group / out group fears. People have a misplaced blame on the immigrants for their decreasing quality of life. This is somewhat naiive in my opinion, but this belief is the the result of constant RNC propaganda to absolve themselves of responsibility in screwing over the people they govern. The problem is (mostly) that US manufacturing was exported, not that labor was imported. I do think this was inevitable but the impacts of this have been devastating on a big part of the US. Now: did Trump actually drain the swamp or do anything to reduce corruption in politics? No he did not.

In summary

Both the DNC and RNC can’t wait to get back to politics as usual, in which the only concessions that are made are symbolic. People are kept at each others throats so they wouldn’t dare try and get things done that would take a crumb out of the mouths of the economic elites. Keep an eye out for how the media and entrenched political parties treat candidates that speak to wealth inequality and the lack of power for normal people. Bernie Sanders has been the victim of insane DNC coordination, Andrew Yang is treated as a joke by the media, and AOC is swiftly put in her place by Nancy Pelosi.

All-in-all, substantive reform is needed in the financing of campaigns. The election system requiring massive amounts of capital creates a self reinforcing system in which, in order to get elected politicians must form lucrative relationships with parties whose interests do not align with normal people. Without reforming the campaign finance system, legislation that benefits most Americans and hurts the rich will be impossible.