April 16, 2014

Three Expensive Milliseconds

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APRIL 13, 2014 Paul Krugman, New York Times

Four years ago Chris Christie, the governor of New Jersey, abruptly canceled America’s biggest and arguably most important infrastructure project, a desperately needed new rail tunnel under the Hudson River. Count me among those who blame his presidential ambitions, and believe that he was trying to curry favor with the government- and public-transit-hating Republican base.

Even as one tunnel was being canceled, however, another was nearing completion, as Spread Networks finished boring its way through the Allegheny Mountains of Pennsylvania. Spread’s tunnel was not, however, intended to carry passengers, or even freight; it was for a fiber-optic cable that would shave three milliseconds — three-thousandths of a second — off communication time between the futures markets of Chicago and the stock markets of New York. And the fact that this tunnel was built while the rail tunnel wasn’t tells you a lot about what’s wrong with America today.

Who cares about three milliseconds? The answer is, high-frequency traders, who make money by buying or selling stock a tiny fraction of a second faster than other players. Not surprisingly, Michael Lewis starts his best-selling new book “Flash Boys,” a polemic against high-frequency trading, with the story of the Spread Networks tunnel. But the real moral of the tunnel tale is independent of Mr. Lewis’s polemic.

Think about it. You may or may not buy Mr. Lewis’s depiction of the high-frequency types as villains and those trying to thwart them as heroes. (If you ask me, there are no good guys in this story.) But either way, spending hundreds of millions of dollars to save three milliseconds looks like a huge waste. And that’s part of a much broader picture, in which society is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.

How much waste are we talking about? A paper by Thomas Philippon of New York University puts it at several hundred billion dollars a year.

Mr. Philippon starts with the familiar observation that finance has grown much faster than the economy as a whole. Specifically, the share of G.D.P. accruing to bankers, traders, and so on has nearly doubled since 1980, when we started dismantling the system of financial regulation created as a response to the Great Depression.

What are we getting in return for all that money? Not much, as far as anyone can tell. Mr. Philippon shows that the financial industry has grown much faster than either the flow of savings it channels or the assets it manages. Defenders of modern finance like to argue that it does the economy a great service by allocating capital to its most productive uses — but that’s a hard argument to sustain after a decade in which Wall Street’s crowning achievement involved directing hundreds of billions of dollars into subprime mortgages.

Wall Street’s friends also used to claim that the proliferation of complex financial instruments was reducing risk and increasing the system’s stability, so that financial crises were a thing of the past. No, really.

Funding was diverted to the state fund for highway construction so that an increase in New Jersey state gasoline tax could be averted.

But if our supersized financial sector isn’t making us either safer or more productive, what is it doing? One answer is that it’s playing small investors for suckers, causing them to waste huge sums in a vain effort to beat the market. Don’t take my word for it — that’s what the president of the American Finance Association declared in 2008. Another answer is that a lot of money is going to speculative activities that are privately profitable but socially unproductive.

You may object that this can’t be right, that the invisible hand of the market ensures that private returns and social returns coincide. Economists have, however, known for a long time that when it comes to speculation, that proposition just isn’t true. Back in 1815 Baron Rothschild made a killing because he knew the outcome of the Battle of Waterloo a few hours before everyone else; it’s hard to see how that knowledge made Britain as a whole richer. It’s even harder to see how the three-millisecond advantage conveyed by the Spread Networks tunnel makes modern America richer; yet that advantage was clearly worth it to the speculators.

In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. Mr. Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.

So never mind the debate about exactly how much damage high-frequency trading does. It’s the whole financial industry, not just that piece, that’s undermining our economy and our society.

April 7, 2014

Supreme Oligarchy

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By E.J. Dionne Jr., Published: April 6, Washiongton Post

An oligarchy, Webster’s dictionary tells us, is “a form of government in which the ruling power belongs to a few persons.” It’s a shame that the Republican majority on the Supreme Court doesn’t know the difference between an oligarchy and a democratic republic.

Yes, I said “the Republican majority,” violating a nicety based on the pretense that when people reach the high court, they forget their party allegiance. We need to stop peddling this fiction.

On cases involving the right of Americans to vote and the ability of a very small number of very rich people to exercise unlimited influence on the political process, Chief Justice John G. Roberts Jr. and his four allies always side with the wealthy, the powerful and the forces that would advance the political party that put them on the court. The ideological overreach that is wrecking our politics is now also wrecking our jurisprudence.

The court’s latest ruling in McCutcheon et al. v. Federal Election Commission should not be seen in isolation. (The “et al.,” by the way, refers to the Republican National Committee.) It is yet another act of judicial usurpation by five justices who treat the elected branches of our government with contempt and precedent as meaningless. If Congress tries to contain the power of the rich, the Roberts Court will slap it in the face. And if Congress tries to guarantee the voting rights of minorities, the Roberts Court will slap it in the face again.

Notice how these actions work in tandem to make the wealthy more powerful and those who have suffered oppression and discrimination less powerful. You don’t need much imagination to see who benefits from what the court is doing.

Roberts’s McCutcheon ruling obliterates long-standing rules that limit the aggregate amounts of money the super-rich can contribute to various political candidates and committees in any one election cycle. In 2012, individuals could give no more than a total of $70,800 to all political committees and no more than $46,200 to all federal candidates.

The rule is based on a political reality Roberts sweeps aside with faux naivete: Access and power come not just from relationships with individual members of Congress but from strong links to party leaders and party structures. Someone who helps a party keep its majority by contributing to 200 or 300 candidates and Lord knows how many political committees will have a lot more power than you will if you make a $25 contribution in a congressional race.

Roberts writes as if he is defending the First Amendment rights of all of us. But how many people are really empowered by this decision? According to the Center for Responsive Politics, 1,715 donors gave the maximum amount to party committees in 2012, and 591 gave the maximum amount to federal candidates. The current estimate of the population of the United States stands at more than 317 million.

Those using the word “oligarchy” to describe the political regime the Supreme Court is creating are not doing so lightly. Combine McCutcheon with the decision in the Citizens United case and you can see that the court is systematically transferring more power to a tiny, privileged sliver of our people.

I keep emphasizing the word “power” because the Roberts decision pretends that the concept is as distant from this issue as Pluto is from Earth. The philosopher Michael Walzer, in his book “Spheres of Justice,” made the essential distinction: “Freedom of speech, press, religion, assembly: none of these require money payments; none of them are available at auction; they are simply guaranteed to every citizen. .?.?. Quick access to large audiences is expensive, but that is another matter, not of freedom itself but of influence and power.”

In his McCutcheon opinion, Roberts piously declares: “There is no right more basic in our democracy than the right to participate in electing our political leaders.” This lovely commitment escaped him entirely last summer when he and his allies threw out Section 4 of the Voting Rights Act. Suddenly, efforts to protect the right of minorities “to participate in electing our political leaders” took second place behind all manner of worries about how Congress had constructed the law. The decision unleashed a frenzy in Republican-controlled states to pass laws that make it harder for African Americans, Latinos and poor people to vote.

Thus has this court conferred on wealthy people the right to give vast sums of money to politicians while undercutting the rights of millions of citizens to cast a ballot.

April 4, 2014

Roll Call….Tierney in Wide lead over Moulton

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March 19, 2014

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Barbara Doucet of Newnan, Georgia, has been waiting for affordable health insurance for years. A restaurant server, she has been uninsured almost continuously for 15 years and, until she visited an urgent care clinic a couple of months ago, hadn’t seen a doctor in 14 years. At 63, Doucet is, in her words, “stoked” about the Affordable Care Act.

Doucet signed up for a health plan through HealthCare.gov on Dec. 3, and is paying just a penny a month for that coverage because she qualifies for a tax credit covering all of her $660 premium. Her “silver” plan (plans range from bronze to platinum) has a $500 deductible and a $750 annual maximum on out-of-pocket expenses. Doucet is paying so much less than she expected that she also picked up a $30-a-month dental plan so she can get some much-needed work done on her teeth.

“I’ll be able to really sleep at night because I won’t be terrified: ‘Oh my God, what happens to me if I slip and fall in the bathtub?,’” said Doucet a few weeks before her coverage kicked in on January 1. “And I won’t have to worry about going through bankruptcy again.”

84 Million People

Lying in bed worrying about how to pay for health care had become a routine part of life in the U.S. for many working people. According to a 2012 Commonwealth Fund survey, 84 million people, or nearly half of working-age Americans, were uninsured or underinsured in 2012, which means their out-of-pocket health care expenses consumed 10 percent or more of their income. The report also found that 43 percent of adults skipped needed treatment or did not fill a prescription because it cost too much. And 41 percent of adults reported problems with medical bills or medical debt.

Not surprisingly, the problems are starkest among those with low to moderate incomes. More than half of adults making less than $57,625 a year in 2012 said they had cost-related issues getting health care. And many people earning between $30,657 and $57,625 took major financial hits because of steep medical bills: 53 percent received a lower credit rating, 32 percent were unable to pay for basic necessities such as rent, food, or heat, and 24 percent were forced to delay their career or education plans.

“I’ll be able to really sleep at night because I won’t be terrified: ‘Oh my God, what happens to me if I slip and fall in the bathtub?,’” said Doucet a few weeks before her coverage kicked in on January 1. “And I won’t have to worry about going through bankruptcy again.”

The New Coverage Options

The Affordable Care Act was designed, in part, to help prevent people like Doucet from skipping care or going bankrupt if they are unlucky enough to get sick or injured. Under the law, as of October 2013, each state has a health insurance marketplace, operated by the state or the federal government, through which people without affordable employer-sponsored or public coverage can buy a private health plan. Individuals earning up to $46,000 a year, and families of four earning up to $94,000, are eligible for federal subsidies, or tax credits, to help cover premiums costs. In addition, small businesses with fewer than 50 employees can shop for coverage for their workers on the Small Business Health Options Program (SHOP) Marketplace.

The Affordable Care Act also called for expanding Medicaid in every state to people earning up to 138 percent of the poverty level, the equivalent of about $16,000 a year for an individual. But after the U.S. Supreme Court determined in 2012 that state participation in the Medicaid expansion was optional only 26 states are expanding Medicaid.

The ACA also requires all health plans—whether sold in or out of the marketplaces—to offer an essential benefit package, including outpatient and emergency care, maternity care, and other services. Within the marketplaces, there are four tiers of plans—bronze, silver, gold, and platinum—that each offer a different level of cost-sharing for consumers. So a bronze plan covers between 60 percent and 69 percent of a person’s estimated medical expenses for the year, while a platinum plan covers more than 90 percent of estimated bills.

For comparison, in 2010 about two-thirds of people with employer-sponsored coverage had the equivalent of a gold or platinum plan, while about half of those who bought coverage for themselves had plans with benefits that were less comprehensive than a bronze plan. Many of these skimpy plans were canceled by insurers at the end of 2013 because they did not meet ACA standards.

David Weidman, 51, of Los Angeles, had such a plan prior to January 2014. A realtor, Weidman was buying his own coverage as well as coverage for his 10-year-old daughter, Lulu, on the individual market. Prior to this year, there were few consumer protections in individual health insurance market in most states: women were charged more than men, people with preexisting conditions were denied coverage, and premiums and deductibles were often prohibitively high. In fact, a 2011 Commonwealth Fund survey found nearly half of people who sought a plan on the individual market didn’t end up buying one.

Weidman’s plan, which was canceled at the end of 2013, cost about $600 a month, with a $5,000 deductible. His new coverage, purchased over the phone through Covered California on October 3, costs him $192 a month, thanks to a tax credit based on his estimated 2014 income. (Weidman will pay back the Internal Revenue Service [IRS] some of his monthly subsidy of $360 at the end of the year if his income is higher than anticipated. If his income is lower than his estimate, the IRS will credit him.) He also has a more manageable $500 deductible and broader coverage with the silver plan he selected. His daughter is now covered through MediCal, which has no premium.

This winter, Weidman plans to have nasal polyp surgery, something he had been postponing while on his old coverage because of its $10,000 price tag. This sinus surgery is covered under his new marketplace plan.

David’s previous coverage costs:

$600/month
$5,000 deductible
David’s new

coverage costs:

$192/month

$500 deductible
+ broader coverage

Michael A., 49, and his wife, Catherine, of Montclair, New Jersey, were also buying their own coverage for themselves and their two children before the ACA marketplace opened. Both are self-employed: Michael is a composer for film and TV and his wife is a psychotherapist in private practice. They paid $1,300 a month for their former coverage.

“We opted to get a fairly minimal plan and just pay for things as they came up,” Michael says. “It was a compromise between having and not having insurance—hospitalizations would be covered. But it turns out that our son has a condition that requires electrocardiograms (EKGs) and we have a $500 limit per year on outpatient testing and that covers nothing. Anytime any of us needs an EKG or blood work, we’re paying in full out of pocket.”

In the New Jersey marketplace, Michael and his wife chose a gold plan that will cover 80 percent of the costs of their son’s routine medical tests, with a full premium of $1,893, a deductible of $2,000, and an out-of-pocket max of $5,000. With the subsidy they qualify for under their 2014 estimated income, he and his wife are paying considerably less than they were before, for better coverage. They have some concerns about the accuracy of their 2014 estimated income, however, since they are right on the subsidy line. If Michael and his wife make more than they did in 2013, their plan would become unaffordable.

Yet, overall, Michael is comforted by the fact that he and his wife will be able to change plans during the next enrollment period if necessary, and that their coverage is so much more comprehensive.

“When we hear on the news about these non-ACA compliant plans and how three out of four people who go bankrupt because of a health event had insurance…I definitely feel like we were in line to join them. If something major had happened, it’s very possible that it would have been more than we could have handled financially. And having some familiarity with the ACA and knowing what it mandates in terms of minimum coverage I feel a lot safer and more secure, and like that I’m going to actually have insurance in the literal sense of the word.”

“When we hear about how three out of four people who go bankrupt because of a health event had insurance…I definitely feel like we were in line to join them. Having some familiarity with the ACA,

I feel a lot safer and more secure.”

Ensuring Marketplace Success. Enrollment in the marketplaces, which began in October, was not made easy by the technical problems that plagued HealthCare.gov and many of the state websites. In fact, Michael and his wife hit online snags that delayed their enrollment and required repeated customer support calls. Fortunately, enrollment has grown at a fast pace since December, reaching 4 million by mid-February. People have until March 31 to sign up for coverage in 2014 and not face a penalty for being uninsured.

The Commonwealth Fund’s latest Affordable Care Act tracking survey finds that awareness of the new coverage options stands at 63 percent among the potentially eligible, indicating there’s more to be done to bring people into the marketplaces. Yet, among eligible people who are aware, there is still definite interest. According to the survey, 59 percent of adults who either had not yet gone to their marketplace, or had visited it but not yet applied for or enrolled in a plan, said they were likely to visit by the end of March 31 to enroll or find out if they are eligible for financial help.

One factor considered key to the success of the marketplaces is the participation of health people and young adults, who have high rates of uninsurance, in order to spread out insurers’ risk and keep premiums low. While the makeup of the enrollees is still not clear, the Commonwealth Fund marketplace survey data suggest that by December, 41 percent of marketplace visitors were ages 19 to 34, and more than three-fourths of all visitors reported that they were in good health. A recent Commonwealth Fund study found that the health status of enrollees of all ages was more important to the success of the marketplaces than young adult participation.

Alison Megliola, 30, of Los Angeles, signed up for a bronze plan through Covered California in October. Megliola recently completed a master’s degree in nutrition and is doing a required internship without benefits at the Veterans Administration Greater Los Angeles Healthcare System. With her basic plan, she says, there’s a high deductible of $5,000 but her monthly premium is just $25, with her subsidy of $188. “I got insurance for peace of mind,” she says. “I run a lot and am concerned about injuries or getting hit by a car. On the other hand, I am a healthy person and rarely go to the doctor.”

Megliola adds that her plan covers her first three doctors’ visits entirely, so she can get a yearly exam and two other visits “before I start chipping away at my deductible.”

While the Affordable Care Act’s coverage expansion won’t wipe out people’s worries about their health and health care, it will, for many, provide a stronger sense of financial security. And someone like Barbara Doucet will no longer have to “self-medicate” at the local Walgreen’s or Publix because she can’t afford to go to the doctor. “It was getting tougher every day.”

March 12, 2014

How Democrats Can Compete for the White Working Class

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MARCH 11, 2014, New York Times

On the surface, the Democratic Party’s bid to win back the votes of the white working class looks like an impossible task.

Between 2008 and 2012, President Obama’s already weak support among these voters dropped from 40 percent to just 36 percent.

Looked at from a different perspective, though, Democratic prospects do not seem so gloomy. There was a wide disparity in Obama’s performance among white working-class voters in different sections of the country: awful in the South and significantly better in much of the rest of the country. This suggests that a targeted regional strategy could strengthen the Democratic Party’s chances with what was once its core constituency.

Before we get into regional subtleties, let’s examine the question from the national vantage point.

The results of two national surveys released last year in March and in July by Democracy Corps, a polling organization sponsored by Democrats, provide little ground for liberal optimism.

In response to my request, Erica Seifert, a senior associate at Greenberg Quinlan Rosner, which conducted the Democracy Corps surveys, provided detailed results comparing the views of white, noncollege-educated voters with the views of all voters.

For Democrats, one of the more worrisome findings that Democracy Corps turned up is that these voters are far more suspicious of government than the general public. This is in contrast to Democrats generally, who are by most measures far more pro-government than the rest of the electorate, according to American National Election Studies,

Democracy Corps found that less well-educated whites agree, by a huge 46.2 percentage point margin, with the statement “When something is run by the government, it is usually inefficient and wasteful.” This is 11.6 points more than all voters.

Similarly, the general public agrees that “It is the responsibility of the government to take care of people who can’t take care of themselves” by a 19.5 percentage point margin, while whites who did not go to college agree by half that.

Asked to choose between two statements — “I’m more concerned we will go too far in cutting spending and will cut off programs that middle- and working-class people rely on” or “I’m more concerned we won’t go far enough in cutting spending and our deficits will continue to grow” — all voters came down firmly on the side of worrying about cutting too much, 58-42. The white, noncollege voter was evenly split.

According to Democracy Corps, working-class whites fall on the more conservative side of the spectrum on a broad range of issues, including military spending, gay rights, immigration, public works spending and the potential expansion of pre-K classes.

There are a few — but very few — issues on which the white working class is more liberal than the general public, all of which capture the group’s bread-and-butter concerns: expansion of family, maternity and sick leave; a belief that “Wall Street hurts the American economy more than it helps”; and support for the protection of Medicare benefits.

Let me stress here that the Democracy Corps findings are from national surveys.

A far less pessimistic analysis of Democratic prospects among working-class voters emerges from a major study that the Public Religion Research Institute released in September 2012, “Beyond Guns and God: Understanding the Complexities of the White Working Class in America.”

Continue reading the main story

The key finding in the P.R.R.I. study is that working-class whites in the South are – no surprise — far more conservative than their counterparts in the rest of the country. Lumping all of these voters together exaggerates this constituency’s overall rightward tilt.

The regional differences are striking in the cases of both partisan voting patterns and how voters feel about particular issues.

The pre-election P.R.R.I. study found that white working-class voters in the South backed Romney over Obama 62-22, compared to a 46-41 Romney advantage in the West, a 42-38 edge in the Northeast and an Obama lead of 44-36 in the Midwest.

Similarly, while working-class whites in the South opposed same-sex marriage by 61-32 in the P.R.R.I. survey, in the Northeast they favored it 57-37; in the West they were split 47-45; and in the Midwest they were modestly opposed, 44-49. In the case of abortion, majorities of non-college whites outside of the South believe the practice should be legal, while those in the South were opposed 54-42.

In general, the findings of the P.R.R.I. study suggest that outside the South, Democrats should be able to make significant inroads among working-class whites – and, in fact, they have. In 2008, when Obama was losing nationally by 18 points among noncollege whites, in Michigan he carried these voters 52-46; in Illinois, 53-46; and in Connecticut, 51-47.

In the South, the anti-Obama margins were staggering, which did not go without notice. Noncollege whites in Alabama voted against Obama 90-9; in Mississippi it was 89-11; and in Georgia 78-22.

The P.R.R.I. study did point to one Democratic stumbling block: affirmative action and “reverse discrimination.”

Three out of five working-class whites believe “that discrimination against whites has become as big a problem as discrimination against blacks and other minorities.” This view is strongest in the South, at 69 percent, but it is the majority conviction of working-class whites in all regions of the country, where it is never lower than 55 percent.

In another key measure of white working-class racial resentment, the P.R.R.I. survey found that by a margin of three percentage points, the white working class agreed “that the government has paid too much attention to the problems of minorities.” White noncollege voters were split down the middle on this issue in the Northeast and Midwest. In the South, 58 percent agreed.

Since nothing in this summary mentions gender, it’s entirely meaningless, and a waste of space. White working class men and White working…

“In the South, the anti-Obama margins were staggering, which did not go without notice. Noncollege whites in Alabama voted against Obama…

Thirty years ago, in the aftermath of the 1984 presidential election in which Ronald Reagan crushed Walter Mondale, Democrats weredeeply alarmed over the defection of blue-collar voters.

Stan Greenberg, the Democratic pollster, conducted focus groups in 1985 in the white working-class suburbs of Detroit and found that “these white Democratic defectors express a profound distaste for blacks, a sentiment that pervades almost everything they think about government and politics.”

The perception of reverse discrimination was an even more acute source of anger: “The special status of blacks is perceived by almost all these individuals as a serious obstacle to their personal advancement. Indeed, discrimination against whites has become a well-assimilated and ready explanation for their status, vulnerability and failures.”

A separate study that year, financed by the Democratic National Committee, found that white working-class voters were convinced that “the Democratic Party has not stood with them as they moved from the working to the middle class. They have a whole set of middle-class economic problems today, and their party is not helping them. Instead, it is helping the blacks, Hispanics and the poor. They feel betrayed.”

Over three decades, at least on the part of less educated whites outside the South, the intensity of the hostility toward the Democratic Party has clearly ebbed. In Ohio, according to a different P.R.R.I. study conducted after the 2012 election, white working-class voters were almost evenly split, 44 percent for Obama, 46 percent for Romney.

Ohio provides a valuable test case for the viability of Democratic Party efforts to make gains among white noncollege voters in the North.

Both the 2012 Obama campaign and its allied “super PAC,” Priorities USA, put on a full-court press to win over these key voters in a crucial battleground state, producing commercials featuring factory closingsthat were explicitly aimed at the white working class. By splitting the white working-class vote in Ohio, Obama was able to go over the top among all voters in the state 51-48.

White working-class voters outside the South are becoming more open to the Democratic Party because, as the P.R.R.I. polling on abortion and same-sex marriage shows, they are coming to terms with the cultural transformations stemming from what sociologists call the “second demographic transition.”

As I wrote last September, one of the more visible dividing lines between left and right in American politics is the extent to which voters in a particular state or region have adopted the values of this second demographic transition — a lessening of sexual constraint, extensive nonmarital cohabitation, delayed childbearing, reduced fertility, family disruption, a stress on personal autonomy and individual self-expression, declining religiosity and growing acceptance of women’s rights.

For decades, the cultural conflicts that emerged from the 1960s gave the Republican Party highly effective wedge issues to build support among white working-class Americans.

These voters were first the “silent majority,” then “Reagan Democrats” and subsequently “angry white men,” but they were crucial at every point to the conservative coalition that produced presidential victories for the Republican Party in five of the six elections between 1968 and 1988.

The declining commitment of white noncollege voters outside the South to conservative values has been masked, politically and culturally, by the continued ferocity of sociocultural and racial conservatism among working class whites in the South. But insofar as the second demographic transition is taking hold among these voters in the North, the Midwest and the West, Democratic prospects may well be better than national polling data suggests.

February 28, 2014

Jim DeMint Hasn’t Destroyed Heritage’s Intellectual Integrity The organization never had any.

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Paul Krugman, New York Times

I think it’s interesting that DeMint has pushed Heritage into aneven more blatant political role; but the subtext of such stories often seems to be that until DeMint arrived Heritage was a center of honest, serious, if conservative-leaning research.

In their dreams — or maybe in the dreams of self-proclaimed centrists, who wanted to believe that such an organization existed.

The truth is that the pre-DeMint Heritage was Hack Central, producing garbage posing as research. It promoted the death tax scam; it proclaimed that the Ryan plan would push the unemployment rate down to 2.8 percent, then tried to send that “result” down the memory hole. Heritage economists have promoted the fallacy that government spending can’t increase demand. And so on.

So Heritage never was a “think tank” in the sense that actual thought or research took place there. It just played one on TV.

February 28, 2014

Health Care Horror Hooey

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Paul krugman, New York Times

Remember the “death tax”? The estate tax is quite literally a millionaire’s tax — a tax that affects only a tiny minority of the population, and is mostly paid by a handful of very wealthy heirs. Nonetheless, right-wingers have successfully convinced many voters that the tax is a cruel burden on ordinary Americans — that all across the nation small businesses and family farms are being broken up to pay crushing estate tax liabilities.

You might think that such heart-wrenching cases are actually quite rare, but you’d be wrong: they aren’t rare; they’re nonexistent. In particular, nobody has ever come up with a real modern example of a family farm sold to meet estate taxes. The whole “death tax” campaign has rested on eliciting human sympathy for purely imaginary victims.

And now they’re trying a similar campaign against health reform.

I’m not sure whether conservatives realize yet that their Plan A on health reform — wait for Obamacare’s inevitable collapse, and reap the political rewards — isn’t working. But it isn’t. Enrollments have recovered strongly from the law’s disastrous start-up; in California, which had a working website from the beginning, enrollment has already exceeded first-year projections. The mix of people signed up so far is older than planners had hoped, but not enough so to cause big premium hikes, let alone the often-predicted “death spiral.”

And conservatives don’t really have a Plan B — in their world, nobody even dares mention the possibility that health reform might actually prove workable. Still, you can already see some on the right groping toward a new strategy, one that relies on highlighting examples of the terrible harm Obamacare does. There’s only one problem: they haven’t managed to come up with any real examples. Consider several recent ventures on the right:

? In the official G.O.P. response to the State of the Union address, Representative Cathy McMorris Rodgers alluded to the case of “Bette in Spokane,” who supposedly lost her good health insurance coverage and was forced to pay nearly $700 more a month in premiums. Local reporters located the real Bette, and found that the story was completely misleading: her original policy provided very little protection, and she could get a much better plan for much less than the claimed cost.

? In Louisiana, the AstroTurf (fake grass-roots) group Americans for Prosperity — the group appears to be largely financed and controlled by the Koch brothers and other wealthy donors — has been running ads targeting Senator Mary Landrieu. In these ads, we see what appear to be ordinary Louisiana residents receiving notices telling them that their insurance policies have been canceled because of Obamacare. But the people in the ads are, in fact, paid actors, and the scenes they play aren’t re-enactments of real events — they’re “emblematic,” says a spokesman for the group.

? In Michigan, Americans for Prosperity is running an ad that does feature a real person. But is she telling a real story? In the ad, Julia Boonstra, who is suffering from leukemia, declares that her insurance has been canceled, that the new policy will have unaffordable out-of-pocket costs, and that “If I do not receive my medication, I will die.” But Glenn Kessler of The Washington Post tried to check the facts, and learned that thanks to lower premiums she will almost surely save nearly as much if not more than she will be paying in higher out-of-pocket costs. A spokesman for Americans for Prosperity responded to questions about the numbers with bluster and double-talk — this is about “a real person suffering from blood cancer, not some neat and tidy White House PowerPoint.”

Even supporters of health reform are somewhat surprised by the right’s apparent inability to come up with real cases of hardship. Surely there must be some people somewhere actually being hurt by a reform that affects millions of Americans. Why can’t the right find these people and exploit them?

The most likely answer is that the true losers from Obamacare generally aren’t very sympathetic. For the most part, they’re either very affluent people affected by the special taxes that help finance reform, or at least moderately well-off young men in very good health who can no longer buy cheap, minimalist plans. Neither group would play well in tear-jerker ads.

No, what the right wants are struggling average Americans, preferably women, facing financial devastation from health reform. So those are the tales they’re telling, even though they haven’t been able to come up with any real examples.

Hey, I have a suggestion: Why not have ads in which actors play Americans who have both lost their insurance thanks to Obamacare and lost the family farm to the death tax? I mean, once you’re just making stuff up, anything goes.

February 22, 2014

Tierney: I’ve delivered for district

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Representative highlights work in health care, education

John TierneyOwen O’Rourke / Item Photo

John Tierney

Congressman John Tierney answers questions from members of the Lynn Item editorial board on Wednesday.

By Chris Stevens / The Daily Item

LYNN — U.S. Rep. John Tierney is touting his work over 18 years to make higher education more accessible and affordable; improve health care for veterans; deliver funds for infrastructure improvements; and create jobs.

Tierney faces a primary challenge in September from fellow Salem Democrat Seth Moulton, and Republican Richard Tisei, the GOP nominee for the seat in 2012, is running again.

During an editorial board visit to The Daily Item on Wednesday, Tierney said his experience is needed in Washington to push policies designed to re-energize the economic recovery, get more people back to work and return prosperity to the nation.

“We’re working through the most challenging times,” Tierney said. “Jobs are coming back; too slowly, but they’re coming back. We’ve had gains the last 47 months consecutively but there’s more work to do … People won’t be comfortable until we don’t have four people going for every job.”

He said House Speaker John Boehner “knows that if he wants to get anything done he has to come over and work with Democrats,” adding that 60 to 80 members of the Republican caucus “have decided that government is nothing they want to be involved with … that any government action at all is an infringement on their personal liberty and freedom.”

Tierney highlighted his efforts to draft the House version of the Workforce Investment Act, which he said supports community colleges, job training, internship and apprenticeship programs, at a time when the 6th District in particular is seeing a resurgence in advanced manufacturing jobs.

Education

A member of the House Committee on Education and the Workforce, Tierney cited many measures he sponsored to help students, including the Higher Education Opportunity Act, the Student Aid and Fiscal Responsibility Act and the America Competes Reauthorization Act.

He said the income-based college loan repayment program is something that doesn’t get enough attention. Under the plan, college graduates repay loans based on a percentage of their income. Congress initially set that percentage at 15, but President Obama lowered it by executive order to 10 percent.

“It allows people to manage their college loans and also have a life, buy a car or even a house,” he said. “If they pay 10 percent of their income for 20 years, the rest of the balance is forgiven.

It’s amazing more people don’t know about it, and I think we need to do a better job getting that out there.”

Tierney said he also advocated for the so-called Maintenance of Effort provision, requiring states to maintain their funding for higher education in order to receive increased federal funding.

Veterans

Tierney said he has been a tireless advocate for veterans through his years in Congress, and noted that the 6th Congressional District is one of the few, if only, where veterans have to travel no more than 15 miles to receive health care.

“All of the work in the veterans area, we’re extraordinarily proud of that,” he said. “We put community-based outreach clinics in Haverhill, Gloucester and Lynn. We doubled the size of the one here in Lynn … We’re going to increase the size of the one in Gloucester and put a women’s clinic in there, because 17 percent of the veterans now are women.”

He also cited his support of the Wounded Warriors Act, which he said increased spending on health care for veterans to the highest level in 73 years, as well as his work as chairman of the Subcommittee on National Security and Foreign Affairs of the Government Oversight Committee, which held meetings at Walter Reed Medical Center in Bethesda, Md., which led to renovations to Walter Reed and 16 other veterans hospitals around the country.

Affordable Care Act

Tierney acknowledges the rollout of the Affordable Care Act (ACA) website was a big problem, but defends the need for the ACA and the difference it has already made for millions of Americans.

“People need health care and you have millions of people who have health care now who didn’t have it before. You’ve got people who aren’t being shut out for an annual limit or lifetime limit. You’ve got children on their parents’ plans until they’re 26. You’ve got seniors who are given eight to 10 more years of Medicare from that bill, and it gets rid of the donut hole (in prescription coverage), which is between a $650 and $700 savings per year for seniors, which is substantial,” Tierney said.

He said the Affordable Care Act has also pumped millions of dollars into health clinics, including Lynn Community Health Center.

Delivering for district

Tierney said the Recovery Act money resulted in more firefighters and police officers for area cities and towns, and he said he was a driving force to include in the act funding for education, to prevent teacher layoffs.

He said he has worked to deliver funding for infrastructure improvements throughout the district, including new MBTA garages under construction in Salem and Beverly, Rockport and Newburyport.

And he said he secured an additional $10 million for dredging off Newburyport and Salisbury “to save those areas from continually getting wiped out.”

“It’s about being vigilant and working with agencies,” he added, on the ability to find and secure that funding. “That dredging money came from the Sandy bill.”

Breaking ranks

He said he is not afraid to break ranks with his party when necessary and cited a number of examples.

“I was one of 57 Democrats who voted against getting rid of the Glass-Steagall Act; I break ranks regularly on the fishing industry situation (on catch limits); and I broke ranks on the NSA.”

On the latter issue, he said, “I think the NSA program was way out of control and we have to strike a balance to more reasonably protect people’s rights. … There’s no real reason for government to have five years of collective data with no basis. … It hasn’t resulted in any useful intelligence.”

Regarding Edward Snowden, who made public the NSA surveillance program on Americans, Tierney said Snowden should return to America, face trial and “then there has to be some consideration on what proper disposition should be.”

Minimum wage

Tierney took a shot at the U.S. Chamber of Commerce, an organization he said that fights for loopholes for multinational corporations without regard for small businesses, contending the U.S. Chamber costs small businesses roughly $2,000 per year in fees.

He said he strongly favors an increase in the minimum wage.

“Arguably it should be a little over $11, but $10.10 is a good bill,” he said. “I’d be ashamed if I were an employer paying someone $7.25 an hour.”

Tierney said he intends to continue to serve as the 6th District’s representative in Congress, “for as long as I’m doing a good job, enjoy the work and feel like we’re accomplishing good things for the district,” he said. “And we’ve done good work for the district. We have a lot of accomplishments and I think we clearly are in synch with the needs of the district when it comes to policy.”

He said he scoffs when he hears political opponents attack his record.

“I love the mantra that I haven’t done anything in 18 years, because if I sat down here and went over all that I’ve done, I’d be here the rest of the afternoon. Just go to my website.”

February 18, 2014

The Effects of a Minimum-Wage Increase on Employment and Family Income

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From the Congressional Budget Office

23
report

february 18, 2014

Read Complete Document (pdf, 504 kb)

Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.

What Options for Increasing the Minimum Wage Did CBO Examine?

For this report, CBO examined the effects on employment and family income of two options for increasing the federal minimum wage (see the figure below):

  • A “$10.10 option” would increase the federal minimum wage from its current rate of $7.25 per hour to $10.10 per hour in three steps—in 2014, 2015, and 2016. After reaching $10.10 in 2016, the minimum wage would be adjusted annually for inflation as measured by the consumer price index.
  • A “$9.00 option” would raise the federal minimum wage from $7.25 per hour to $9.00 per hour in two steps—in 2015 and 2016. After reaching $9.00 in 2016, the minimum wage would not be subsequently adjusted for inflation.

Workers' Hourly Wages and the Federal Minimum Wage

What Effects Would Those Options Have?

The $10.10 option would have substantially larger effects on employment and income than the $9.00 option would—because more workers would see their wages rise; the change in their wages would be greater; and, CBO expects, employment would be more responsive to a minimum-wage increase that was larger and was subsequently adjusted for inflation. The net effect of either option on the federal budget would probably be small.

Effects of the $10.10 Option on Employment and Income

Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.

Estimated Effects on Employment of an Increase in the Federal Minimum Wage, Second Half of 2016

Many more low-wage workers would see an increase in their earnings. Of those workers who will earn up to $10.10 under current law, most—about 16.5 million, according to CBO’s estimates—would have higher earnings during an average week in the second half of 2016 if the $10.10 option was implemented. Some of the people earning slightly more than $10.10 would also have higher earnings under that option, for reasons discussed below. Further, a few higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

  • Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.
  • Real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold (out of the roughly 45 million people who are projected to be below that threshold under current law).
  • Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to families whose income would have been between three and six times the poverty threshold.
  • Real income would decrease, on net, by $17 billion for families whose income would otherwise have been six times the poverty threshold or more, lowering their average family income by 0.4 percent.

Estimated Effects on Real Family Income of an Increase in the Federal Minimum Wage, Second Half of 2016

Effects of the $9.00 Option on Employment and Income

The $9.00 option would reduce employment by about 100,000 workers, or by less than 0.1 percent, CBO projects. There is about a two-thirds chance that the effect would be in the range between a very slight increase in employment and a reduction in employment of 200,000 workers, in CBO’s assessment. Roughly 7.6 million workers who will earn up to $9.00 per hour under current law would have higher earnings during an average week in the second half of 2016 if this option was implemented, CBO estimates, and some people earning more than $9.00 would have higher earnings as well.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $9 billion; 22 percent of that sum would accrue to families with income below the poverty threshold, whereas 33 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

For family income overall and for various income groups, CBO estimates the following:

  • Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $1 billion.
  • Real income would increase, on net, by about $1 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 1 percent and moving about 300,000 people, on net, above the poverty threshold.
  • Families whose income would have been between one and three times the poverty threshold would receive, on net, $3 billion in additional real income. About $1 billion, on net, would go to families whose income would have been between three and six times the poverty threshold.
  • Real income would decrease, on net, by $4 billion for families whose income would otherwise have been six times the poverty threshold or more, lowering their average family income by about 0.1 percent.
Effects of a Minimum-Wage Increase on the Federal Budget

In addition to affecting employment and family income, increasing the federal minimum wage would affect the federal budget directly by increasing the wages that the federal government paid to a small number of hourly employees and indirectly by boosting the prices of some goods and services purchased by the government. Most of those costs would need to be covered by discretionary appropriations, which are capped through 2021 under current law.

Federal spending and taxes would also be indirectly affected by the increases in real income for some people and the reduction in real income for others. As a group, workers with increased earnings would pay more in taxes and receive less in federal benefits of certain types than they would have otherwise. However, people who became jobless because of the minimum-wage increase, business owners, and consumers facing higher prices would see a reduction in real income and would collectively pay less in taxes and receive more in federal benefits than they would have otherwise. CBO concludes that the net effect on the federal budget of raising the minimum wage would probably be a small decrease in budget deficits for several years but a small increase in budget deficits thereafter. It is unclear whether the effect for the coming decade as a whole would be a small increase or a small decrease in budget deficits.

February 13, 2014

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