Michael Graetz Saw the ‘Wolf at the Door’ Before the Coronavirus Arrived in the U.S.:
Long before the coronavirus pandemic caused mass layoffs and more than 30 million Americans to file unemployment claims in a matter of four weeks, Michael Graetz, Columbia Alumni Professor of Tax Law and a former official in the U.S. Treasury Department, was worried that too many American households live paycheck to paycheck. “Economic insecurity, anxiety, and fear were already pervasive. Any shock to the economy or to the workforce was going to cause lots of hardship,” he says. “Of course, no one could have foretold how large and difficult this shock has become.”
In his new book, The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It, which was published in February by Harvard University Press, he and co-author Ian Shapiro (a professor of political science at Yale) analyze how the globalization of the workforce, outsourcing, and technological advances threatened millions of people’s livelihoods and contributed to widespread income insecurity before the pandemic. “When the book went to press in November, the virus wasn’t on the horizon,” says Graetz. “All the reasons we cite in the book for worrying about widespread economic insecurity are going to be made worse because some businesses are not going to reopen and jobs are going to disappear. We have a precarious workforce, and the economic shocks from the virus are making it much more vulnerable.”
In The Wolf at the Door, Graetz and Shapiro argue that maintaining the status quo is perilous and immoral. “It is essential that society help people who are left behind or who are in danger of it,” they write. “Otherwise these people may well reject the social contract and succumb to the poisonous snake oil peddled by political charlatans.”
“There are a lot of books about policy that ignore politics,” says Graetz. “And there are a lot of books about politics that ignore policy. But this is one of the rare books that talks seriously about how one can achieve better protections for workers in a politically viable way.
Graetz and Shapiro believe that the current rhetoric of the left and right—the former railing against the 1 percent and the latter advocating for tax cuts and deregulation—may be effective in political campaigns but not in passing legislation that will address the economic insecurity of most Americans. They explain why moral imperatives, bipartisan coalitions, and the support of labor and business interests are the keys to creating substantive change. The authors offer a suite of policy strategies to combat economic insecurity, including increasing take-home pay, creating infrastructure jobs, offering universal health insurance and universal pre-K, introducing effective job reemployment programs, and providing adequate unemployment insurance. ...
As an authority on tax law, Graetz’s idealism is tempered by realism. “The biggest political challenge is raising the taxes that will ultimately be needed to help finance the changes we recommend,” he says. “But political leaders in both parties behave as though this is an untouchable third rail in American politics.” Graetz’s ideas for raising revenue include eliminating certain tax breaks for businesses and their owners, along with hedge fund and private equity managers. He also suggests increased funding for the IRS to collect billions of taxes that go uncollected, a tax on financial institutions based on their liabilities, a low-rate tax on financial trading, and, over time, a value-added tax.
Graetz believes that every law student would benefit from taking a course in tax law. “It is a huge source of economic and social policy,” he says. Graetz developed his appreciation for the importance of politics and economics vis-à-vis tax law and policy at the U.S. Treasury Department, where he served as assistant to the secretary and special counsel in 1992 and before that in the office of the assistant secretary of the Treasury for tax policy. His interdisciplinary approach to policy issues is reflected in his scholarship and the courses he’s taught over his career as a professor at the University of Virginia (where he earned his law degree), the University of Southern California, Caltech, Yale, and Columbia Law, where he has taught since 2009.