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History Quiz

I wonder what happens when a Democratic canidate for President campaigns on a proposal to increase taxes on high incomes and cut taxes on middle and lower class incomes (that is on the class warfare platform) ? IIRC what happens is that he gets elected. This is what Clinton did in 1992 and Obama did in 2008 (and Obama also kept the promise).

So Quiz question — who was the last Democratic candidate to defeat a Republican who
1) was not an incumbent
2) didn’t propose raising taxes on high incomes and cutting them on middle class incomes when the top marginal income tax rate was under 70%

Who was the last before him ?

Who before him ?

Now the tough one–who were the losing Republican candidates ?

Trick question: Who was the last Democrat non incumbent to win who did not propose raising income tax on high incomes when the top rate was under 70% even though this would have been constitutional ?

Answers after the jump

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Understanding Piketty, part 4

We now come to the exciting conclusion of Thomas Piketty’s monumental work, Capital in the Twenty-First Century. This is not an exaggeration: the final part of the book contains findings that I consider to be simply bombshells in their significance.

In Part 4, “Regulating Capital in the Twenty-First Century,” Piketty calls for a new “social state” for the new century, as well as a new way of taxing, a progressive tax on capital. Highlighting the United States, France, the United Kingdom, and Sweden as representative, he shows that all followed similar trends in taxation. Until World War I, all four collected less than 10% of gross national income in taxes. By 1980, the figures had increased to levels ranging from about 30% in the United States to 55% in Sweden. Since 1980, those levels are essentially unchanged.

As discussed by Alan Krueger, countries with high inequality tend to have lower inter-generational income mobility. This holds true in particular for the United States. In fact, Piketty says “the most firmly established result” of research on this question is that the U.S. has the highest correlation of income from one generation to the next (lowest mobility), and the Nordic countries the lowest correlation (highest mobility). The fable often told by conservatives that “we may have inequality, but that changes over generations” is not true today and, more surprisingly, was not true in the twentieth century when the U.S. had lower inequality than Europe.

One reason for this lack of mobility could be the high cost of college, especially among top schools. According to the Harvard financial aid website, tuition and fees come to $43,938 per year. Piketty estimates that the average (mean) income of Harvard students’ parents is $450,000 per year, which is enough to put you in the top 2% of U.S. incomes. Harvard notes that “>70% of our students receive some form of aid,” which isn’t surprising when you run the cost calculator. A family of three with just the one child going to Harvard can receive financial aid even with an annual income of $240,000.

While I have written before about the coming retirement crisis, Piketty points out that it’s not just the United States where Social Security is the only thing standing between seniors and poverty. He writes (p. 478), “in all the rich countries, public pensions are the main source of income for at least two-thirds of retirees (and generally three-quarters).” Ending senior poverty which, as he says, was “endemic as recently as the 1950s,” is the third main outcome of the expansion of the social state (after education and health expenditures). As I’ve said before, we need to keep senior poverty from reappearing.

Piketty considers the future of pensions in a low-growth environment. He notes that in pay-as-you-go (PAYGO) systems, such as Social Security was before the creation of the Trust Fund in the 1980s, “the rate of return is by definition equal to the growth rate of the economy.” Thus, he says, it would be wise to promote rising wages, for example through increased education funding and even policies to increase the birth rate (pp. 487-88). When r>g, however, it seems logical that money for future pensions should be invested to take advantage of the higher return on investment. That was one of the arguments for privatizing Social Security. However, transitioning to a PAYGO system runs into the huge problem that “an entire generation of retirees is left with nothing.” Of course, this is exactly what has happened in the United States and why we are looking at a looming middle class retirement crisis. However, it has not taken place in the Social Security system, but in the area of private pensions. That is, while public pensions in continental Europe equal 12-13% of national income (p. 478), they are only 7-8% in the United States so, traditionally, private pensions picked up the slack. But we now face a situation where 49% of private-sector workers have no pension at all, 31% have been stuck with a defined-contribution plan (401-k, 403-b, etc.), and only 20% have a true pension. Since the 1980s, workers have been transitioned off of defined-benefit pensions and on to — nothing! Well, almost nothing, as we can see from the $6.6 trillion shortfall between what people need to maintain their current standard of living and what they’ve actually saved for retirement.

Moreover, investment-based systems suffer from having much higher variance in their returns, a problem that is magnified when investment accounts are individual rather than collective, i.e. as with the Trust Fund. Indeed, as Piketty says, “the rate of wage growth may be less than the rate of return on capital, but the former is 5-10 times less volatile than the latter.” This is especially a problem, I would argue, when the level of retirement benefits is low relative to pre-retirement income, as it is in the United Kingdom and the United States. Piketty’s preferred solution is to keep PAYGO pensions, but supplement them with guaranteed rates of return for small savers that are closer to r than to g. However, this may have problems of its own. First, where will lower-income people get the money to save in the first place, with falling real wages and all? Second, how will government finance the guarantee in a way that is cheaper than just expanding Social Security? Expanding Social Security has the advantage of shielding individuals from the volatility of the market (and the fact that small investors earn lower rates of return than large investors) while offering a risk-free return (the Trust Fund is invested in Treasury bonds).

Piketty next turns to the progressive income tax, which he calls “the major twentieth-century innovation in taxation” (p. 493). However, in the twenty-first century, it faces two related challenges. First, it is being undermined by international tax competition, including from tax havens. Second, at the very top of the income hierarchy, the income tax is turning regressive, i.e., having lower rates than for those further down the income scale. This is the point Warren Buffett refers to when decrying the fact that he pays taxes at a lower rate than his secretary.

Piketty argues that one reason the progressive income tax is coming under intellectual attack today is that it was adopted chaotically, without time for all its implications to be debated. The tax, he says, “was as much a product of the two world wars as it was of democracy” (p. 498). That is, while many countries had adopted income taxes before World War I, it is only in the aftermath of the war that the top tax rate in major countries exploded. For example, the U.S. top marginal rate went from 7% in 1915 to 77% in 1918. In the United Kingdom, it went from 8% to 60%; in Germany from 4% to 40%, and in France, from 2% to 50%, all in the space of a few years.

Indeed, in both income and estate taxation, the United States was a leader with high rates. Piketty points out that the top marginal rate in the U.S. averaged 81% for the 48-year period from 1932 to 1980. While Britain had similar rates over a long period of time, no other European country did.

Okay, now for the bombshells. As you probably know, top marginal tax rates fell after 1980 everywhere among developed OECD (Organization for Economic Cooperation and Development) member countries. This seems to have increased the incentive for high earners to increase their compensation. In fact, in all 18 countries in the World Top Incomes Database, “the two phenomena are perfectly correlated: the countries with the largest decreases in their top tax rates are also the countries where the top earners’ share of national income has increased the most (especially when it comes to the remuneration of executives of large firms)” (p. 509).

Having the incentive to try for bigger pay raises, managers took advantage of the fact that “it is objectively difficult to measure individual contributions to a firm’s output” and persuaded their employers to give them big raises, often helped by the fact that their compensation committees were composed of people like themselves. So, Piketty says, it is really a question of bargaining power at the top (and don’t forget that he already told us that there is no correlation between executive compensation and firm performance).

Not only did the countries with the biggest cuts in their top marginal tax rate see the greatest increases in top income shares, but at the same time they did not show any greater increase in productivity growth. So top managers were not creating some generalized increase in productivity that they had some kind of moral claim to. In fact, as Piketty points out, productivity growth was 2.3% annually from 1950-1970 but only 1.4% per year in 1990-2010. Yet it is the latter period in which executive pay mushroomed, not the former.

You can probably see where this is going. The entire idea that people’s pay level is based on their marginal productivity, such that they “merit” the incomes they earn, is bunk. It is innately hard to measure marginal productivity, and some people have more bargaining power than others (not to mention greater incentives to bargain hard) for reasons that have nothing to do with productivity. In fact, Piketty, Saez, and Stantcheva found that executive could achieve big raises without great performance most easily in countries with the lowest top marginal tax rate. Thus, the theoretical edifice for the claim that inequality is “fair” collapses.

What can counter the massive increase in incomes at the very top of the distribution? If we stick with income tax, Piketty says that the optimal top marginal rate in the United States is 82% (p. 512). This would apply to the top 0.5% or top 1% of incomes only. This would not affect productivity because it would largely wipe out some economically useless activities. Because those activities would disappear, a tax that high would not raise much revenue. If the United States wanted to raise revenue, Piketty suggests a marginal tax rate of 50-60% on incomes in the top 5%. It’s important to note that while the United States could do this because it is the world’s largest national economy, it is not possible for European countries unless they achieve fiscal coordination. This is extremely difficult due to EU rules requiring unanimity on votes affecting direct taxation (personal and corporate income tax).

The ideal solution, he argues, would be a global tax on capital plus “a very high level of international financial transparency” (p. 515). Piketty recognizes that this is infeasible right now, although he says it might be possible “incrementally,” at the European level, for example (which would still run up against EU voting rules). He argues, though, that the alternative could well be worse: If people view inequality to have reached unacceptable levels, the response might be a breakdown of the global economy via widespread protectionism. (I offer a similar argument at the end of Competing for Capital.) A tax on capital allows high levels of trade to continue while directly addressing the problem of inequality.

One important element of achieving international financial transparency is shutting down bank secrecy. For Piketty, without solid information on inequality (and hence on individuals’ ownership of capital), it is impossible to have a democratic debate about the type of taxation and government services that individuals want. Tax havens and their defenders will whine about this being an intrusion on people’s privacy, but Piketty’s response is compelling (p. 522):

No one has the right to set his own tax rates. It is not right for individuals to grow wealthy from free trade and economic integration only to rake off the profits at the expense of their neighbors. That is outright theft.

For this reason, he advocates the automatic exchange of bank information to ensure transparency.

Piketty argues that we should not rely solely on an income tax. The fact of the matter is that capital ownership generates much economic income (such as capital gains) that doesn’t have to be declared year-to-year. As a result, income tax filings grossly understate rich people’s true income. This means that the problem of tax regressivity at the top is even worse than he discussed under the income tax. He goes back to the example of L’Oréal heiress Liliane Bettencourt. Her wealth exceeds €30 billion, and her rate of return is somewhere between 6% and 7% a year (€1.8-€2.1 billion in economic income). Yet she herself has said that she has never declared more than€5 million per year in income. Even if she’s paying 50% of this figure in income taxes (France’s top bracket is currently 53%), that €2.5 million is barely 0.1% of her economic income. It is hard to get taxation more regressive than that.

Not only would a tax on capital create financial transparency while raising a modest amount of revenue (Piketty envisions 2% of European GDP), but Piketty argues that an extraordinary tax on capital on the order of 15% could wipe out Europe’s current debt problems. As he says (p. 540), “From the standpoint of the general interest, it is normally preferable to tax the wealthy rather than borrow from them.” The alternatives are inflation, which governments have frequently used, and austerity, which Europe is currently using with predictably bad results. Moreover, he says, it is possible to get more precise targeting of the distributional consequences you want with a wealth tax than with debt repudiation or inflation.

I mentioned before that Piketty believes that the United States is large enough by itself to levy an 82% top income tax rate, whereas Europe isn’t. The same is true, in his view, on a capital tax (he also thinks China might be able to effectively tax capital). Europe’s problem is that tax competition is particularly intense, a problem he lays at the feet of the smaller economies, particularly Ireland (no surprise there). Piketty sees the creation of fiscal union (with EU-wide corporate income taxes apportioned to each country by formula) as no more utopian than the idea of creating the euro. Indeed, he seems to think that political union is ultimately necessary to end destructive tax competition, though he is pleasantly surprised at the traction gained for instituting a European financial transaction tax. He proposes a “budgetary parliament” for the Eurozone that could make democratic decisions on fiscal matters, and argues that it should not be bound by any fixed rules limiting deficits or debt — which will be nearly impossible to get Germany to agree to.

He concludes by reminding us that we cannot escape the possibly infinite concentration of capital that follows from r>g unless governments take proactive policies, most importantly an annual progressive tax on capital. The inequality r>g does not follow from market imperfections, so it cannot be solved simply by making markets more competitive. While he acknowledges that there is a real risk that increased European integration could lead to the shriveling of the social states constructed in each nation, the problem is that this is inevitable in the absence of creating a political entity large enough to regulate capitalism. “If we are to regain control over capitalism, we must bet everything on democracy — and in Europe, democracy on a European scale.”

For those of us in the United States, we already have a political entity big enough to battle the pressures for greater inequality. But of course we have numerous obstacles in our way as great wealth buys high levels of political influence, especially in the Citizens United era.

My next post will provide a summary and critique of the book (after a chess tournament break).

Cross-posted from Middle Class Political Economist.

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Browncare. Go for it, New Hampshirites! It’s BETTER!

In a new radio interview, [Massachusetts senator-cum-New Hampshire senate candidate Scott] Brown professes support for protecting people with preexisting conditions and other general goals of the law. But he reiterates his support for repealing Obamacare, claiming its goals should only be accomplished by states:

“I believe states can do it better. They can certainly cover preexisting conditions, cover kids to X age, whatever you want — catastrophic care, covering those who need additional coverages…other states have addressed these issues.”

But when asked whether, under Brown’s vision, states could decline to offer protections for preexisting conditions, Brown replied:

“I have to respectfully disagree. It’s something that’s very important for our state and its citizens. It’s something that more than likely would be covered in any type of plan that we offered…that is one thing that is important to me. I’ve already voted on something like that. And I would continue to support that.”

That appears to be a reference to Brown’s previous support for Romneycare in Massachusetts.

– Morning Plum: Scott Brown calls for replacing Obamacare with Romneycare, Greg Sargent, Washington Post, today

I, too, believe states can do it better.  If, say, they wanted to.  Which, since there was nothing to stop from doing better, or even from doing as well as, Obamacare, before 2010, and in fact there still is not—and since only one state, Massachusetts, did in fact do better. (Romneycare’s coverage of everyone who needed subsidies did not depend upon whether the person’s county agreed to accept payments from the state for people whose income is between the poverty level and 133% of the poverty level, after all, which for those who fell into that category, was, y’know, better.)

Since Obamacare is, in essence, Romneycare on a national level, with the exception that (to my knowledge) Romneycare had no distinction between in the way the subsidies worked, on the one hand, for people whose income under Obamacare means that they have no coverage at all if their state has not adopted the Medicaid expansion, and people whose income entitles them to federal subsidies under Obamacare irrespective of whether or not that their state has not adopted the Medicaid expansion.  And with the exception that, well, under Romneycare, the total cost of the subsidies was paid by the state of Massachusetts.  Rather than, y’know, the federal government.

So, take note, New Hampshirites: Scott Brown wants your state to pay the healthcare insurance subsidies for New Hampshire residents who now receive federal subsidies under Obamacare or who apparently are about to receive coverage paid virtually entirely by the federal government once New Hampshire adopts the Obamacare Medicaid expansion, as it reportedly is about to do.

Well, okay, he doesn’t want New Hampshire to actually provide subsidies to everyone who needs subsidies in order to afford healthcare insurance, as Romneycare did.  No, he wants those subsidies to go only to a certain segment of people who can’t otherwise afford healthcare insurance and who, until this year via Obamacare didn’t have insurance.  Because, y’see, it’s better—his word—to have a substantially higher percentage of New Hampshirites uninsured because they lack access to subsidies to help them afford it.

And he also thinks it’s better—his word—to have insurance premiums skyrocket because, under Browncare would, like Romneycare and Obamacare, prohibit insurance companies from declining coverage to people with preexisting conditions or charging them higher premiums, but unlike Romneycare and Obamacare, would not require anyone to purchase healthcare insurance before, say, they needed major medical care.

Unfortunately, though, Brown is not a candidate for governor or even for the state legislature.  So, as popular as Browncare is likely to be in New Hampshire, electing him to the U.S. Senate won’t cause New Hampshire to take over healthcare subsidies for some state’s residents who now receive federal subsidies under Obamacare, and to return many others to their pre-2014 uninsured status.  And electing him to the U.S. Senate won’t even cause healthcare coverage premiums to price many (most?) individual-market policyholders out of the individual market.

Well, at least not within the following two years, anyway–since Obama will remain president until Jan. 2016.  Or, if Obama is impeached and convicted of high crimes and misdemeanors, Joe Biden will be president for the remainder of the current presidential term.  If Brown is elected, this will be very frustrating for everyone who voted for him, as the continued presence of a Democrat in the White House will prevent New Hampshire from making it’s healthcare coverage system worse, er, I mean better.

Of course, there’s always the option of a coup.

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Obamacare Enrollment (part 2) Who Will Remain Opposed to Obamacare in 2015? “Zero-Sum Thinking”

In 2015, I predict that Obamacare enrollment will soar, matching 2014’s success.

This may seem counter-intuitive. After all, in recent months, the public’s perception of Obamacare seems to have soured. The Henry J. Kaiser Foundation’s health care tracking poll for July reveals that 53% of those surveyed last month said they view the Affordable Care Act unfavorably—a jump of 8 percentage points since June.  July’s results mark the first time since January, that more than half of all Americans opposed the health reform law

Is this because people who have enrolled in the Exchanges are unhappy with the insurance they purchased?


Most People Who Signed Up for  Obamacare Are Happy

Just one month earlier a Kaiser Foundation poll showed that “71%” of those who have enrolled in insurance plans that comply with Obamacare’s rules “rate their coverage as excellent or good overall,” and “more than half (55%) say it is an excellent or good value for what they pay for it.”

This is in part because in the Exchanges, middle-income as well as low-income customers qualify for government assistance to help cover premiums. As a result, 87% of customers have received subsidies that come in the form of tax credits.

Nearly six out of ten of Obamacare’s new customers were previously uninsured, Kaiser reports, while the remainder are “plan-switchers” – people who previously had individual market coverage and switched to new coverage after Jan. 1.  This group includes people who had their old policies cancelled as the ACA’s requirements kicked in, as well as people who switched for other reasons, including the availability of premium subsidies.

No surprise, customers who were forced to switch to a plan that meets Obamacare regulations are not as pleased as those who were previously uninsured. Yet nearly half of the “switchers” acknowledge that after using the tax credit, their new, more comprehensive Obamacare plan costs less than their old policy. This means that they are getting more for less. And I would predict that as they use their new policies ( and discover, for example, that preventive care is free)  many will become more enthusiastic.

Here is  the bottom line: “As a whole,” Kaiser observes, “enrollees are more likely than the public overall to have a favorable view of the ACA: they are roughly evenly split between positive and negative views (47% favorable vs. 43% unfavorable). By contrast, views among the general public are more negative than positive (38% favorable vs. 46% unfavorable.)

In other words, people who have had direct experience with Obamacare are more likely to support it. Those who have only read about reform are more likely to be opposed

What Determines Whether A Person Approves or Disapproves of Reform? 

A close look at the polls reveals that how someone feels about Obamacare has far more to do with his or her politics than with any direct knowledge of the program. Sixty-nine percent to Democrats view the Affordable Care Act favorably, compared to only 14 percent of Republicans.

The majority of those Republicans have never shopped the Exchanges because they don’t need Obamacare. Many work for an employer who offers generous benefits. Indeed, of the 15 million 20-somethings who have stayed on a parent’s employer-based plan, 63% identify themselves as Republicans. This is because Republican parents are more likely to have health benefits at work. Other Republicans who own their own businesses often fund their own medical care with money that they have tucked way in tax-advantaged health savings accounts. Finally, some Republicans shun the ACA’s marketplaces because they want nothing to do with government social programs–even if they might qualify for subsidies.

What Many Republicans Don’t Know About Obamacare

Since many have never priced policies in the Exchanges, Republicans are inclined to believe the misinformation that reform’s opponents have planted in the media, including the myth that Obamacare is “unaffordable.”

In truth, last year, after using his tax credit,  the average Exchange customer paid $82 a month for coverage. Many people shell out more for cable TV.

Here’s an overview of what various Exchange customers paid last year:

Somehow, the mainstream media rarely broadcasts these numbers. It’s easier to just quote a pundit’s claims about “sticker shock.” And sadly, as I have reported, these days, many journalists don’t have the time—or in some cases, the desire—to fact-check what their sources are saying. But as I suggested in part 1 of this post (URL) those who have enrolled in Obamacare are beginning to tell their friends. Word-of-mouth will play a major role in driving 2015 enrollments.

Zero-Sum Thinking

Meanwhile, it seems that the less someone knows about Obamcare, the more likely he is to disapprove.


Not long ago, Robert Blendon, a public opinion analyst at the Harvard School of Public Health, told ABC that “negative views about the law are driven by people who already had insurance”—in most cases, through their employer. “They worry that the coverage expansion will raise their premiums or compromise the quality of care they receive.”

‘Rightly or wrongly” he added, “people who are not directly aided by [Obamacare] are worried.”

When I asked Blendon to expand, he pointed to a recent advertising survey done by Kantar Media showing the large number of negative Obamacare ads running on commercial outlets.  Kantar estimates that since the Affordable Care Act passed in 2010, $445 million has been spent on political TV ads mentioning the law, and spending on negative ads has outpaced positive ones by more than 15 to 1.

Those ads have reached  wide audience, and in his e-mail, Blendon observed: “They all focused on what the risks are to middleclass individuals” who already have coverage. For example, some fret that if more people are insured, their doctors’ waiting room might be crowded.

In this way, Republicans have encouraged “zero-sum thinking” (the assumption that if someone else gains something, you may well lose something): “If more low-income families are insured, there won’t be enough doctors and nurses to take care of my me and my children.”

According to Blendon the advertising assault on the Affordable Care Act draws on lessons Republicans learned during the Clinton administration about harnessing “the ambivalence the middle class has about big reform” to win midterm elections.   They assume that “big reforms” won’t help them—and might cost them something.

I agree, though in this case I would say we’re not talking about the middle-class (defined as households earning roughly median income, or $52,000) Half of all Americans earn more than median income, half earn less. Upper-middle households, earning more than, say, $70,000, are more likely to enjoy employer-based coverage, in large part because they are more apt to be able to afford their share of the premium. (In 2012, 86% of families with joint income over  $75,000 enjoyed employer based coverage, vs. 31% of those bringing home $50,000 to 74,000 and just 12% of those earning $40,000 to $49,000.

As More People Experience the Reality of  Obamcare, Attack Ads Become Less Potent

Nevertheless, even the GOP is beginning to realize that the number of Americans who feel so economically secure that they feel ambivalent about government assistance for the middle-class is shrinking. More and more families realize that they–or their adult children–might well need Obamacare. As Bloomberg News recently reported, the fact Republicans have cut way back on ads that attack Obamacare in North Carolina, Louisiana and Arkansas is “a sign that the party’s favorite attack against Democrats is losing its punch.” 

What California Tells Us About the Future of Obamacare

Meanwhile, support is increasing in one state that has been particularly successful in enrolling the uninsured—California. Since the launch of the state’s health insurance exchange, Covered California, and the expansion of MediCal, the insurance program for low income people, California has extended coverage to more than 3 millions state residents, helping to cut the rate of the uninsured by half.

Meanwhile, state polls reflect growing awareness of the benefits of the ACA. The San Jose Mercury News reports;  “The nation’s new health care law is surging in popularity in the Golden State, according to the Field Poll, which finds more Californians today — of all political stripes — support the Affordable Care Act than at any time since it was signed into law four years ago.

The poll of 1,535 likely voters from June 26 to July 19 showed that 56 percent of registered voters say they support the law, while 35 percent are opposed.” Support is up six points from last year.”

Here, let me suggest that it’s worth remembering the old saw: ““Whatever is going to happen, will happen first in California?”

The biggest increase in support (or the largest reduction in opposition) is coming from those groups that were previously opposed or evenly divided.” the San Jose paper reported. “GOP support is up 5 percentage points from last year. And fifty-six percent of voters with no party preference, favor the law—up two percent from a year earlier.”

All in all, this seems an early indication that when it comes to health care reform, familiarity breeds support.


Originated at Health Beat Blog – Maggie Mahar

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The PPACA Takes on Bloated Healthcare Executive Pay in 2013

What impact would Congress have on corporations if it were to change the amount of tax-deductible executive performance-based compensation downwards from $1 million to $500,000? The portal to the upper 1% of household taxpayers in income is $500,000 in normal income. If Congress were to limit tax-deductible performance-based income to $500,000, the change would put an end to a large portion of the tax write-offs on executive pay by corporations. The JCT estimates $50 billion would be realized in a ten-year period. How serious is the skewing of income to a relative few to avoid corporate taxes? An IPS study found 25 of the 100 highest-paid corporate chief executives in the United States took home more in income than what their companies paid in 2010 federal income taxes.

As a part of the PPACA passed in 2010 this provision finally came into play in 2013. The provision “generated an ~ $72 million in additional tax revenue in 2013 from America’s 10 largest publicly held health insurance companies” as taken from “57 executives.” It is one of the lesser-known provisions of the PPACA which is increasing revenue to fund the PPACA. Sarah Anderson of the The Institute for Policy Studies just released the report of the impact of this provision for 2013. More of those healthcare companies will full under its impact in 2015 as the grandfathered bonuses pre-2010 expire created an ~$5 billion annually.

While it does not limit the amount of compensation to the top healthcare executives, the new performance-pay rule made taxable bonuses, stocks, etc. in excess of $500,000 taxable and down from $1 million previously. What companies could claim as deductible for executives dropped from 96% in 2012 to 27% in 2013 causing 10 corporations to owe an average of $1.3 million in taxes per executive. A similar provision with a broader scope is being considered under Senators Reid and Blumenthal’s Stop Subsidizing $Multimillion Corporate Bonuses Act (S1476).

Executive Excess 2014: The Obamacare Prescription for Bloated CEO Pay, Sarah Anderson, Sam Pizzigati and Marjorie Wood. Institute for Policy Studies August 27, 2014

Stop Subsidizing $Multimillion Corporate Bonuses Act Senator Reid and Senator Blumenthal

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Obamacare Enrollment 2015: How Many People Will Sign Up Next Year? (Public Support for Obamacare Is About to Turn a Corner) Part 1

Thanks to the Affordable Care Act, some 10 million previously uninsured adults gained coverage during the open enrollment period that began on October 1, 2013. Last month, the New England Journal of Medicine reported that the share of Americans who are “going naked” has plummeted from 21 percent in September of 2013 to 16.3 percent in April of this year.

Even though open enrollment officially ended on March 31, 2014, people are continuing to sign up. Anyone who experiences a major life change (getting divorced, losing a job, having a baby) can still purchase insurance on the Exchanges this summer. Others are dropping out because they landed a job, married someone with insurance, or turned 65.

Earlier this month, Aetna told Investor’s Business Daily “the degree of attrition was “scary” and “unexpected,” and as a result, enrollment is “shrinking.” But enrollment expert Charles Gaba soon put that rumor to rest. Perhaps Aetna is losing customers, but overall, enrollment is holding up. Indeed, ultimately, the Congressional Budget Office (CBO) projects that by the end of 2014, 12 million formerly uninsured Americans will be covered either by the Obamacare insurance they purchased on the Exchanges or by newly expanded Medicaid programs.

On November 15, a new open enrollment period begins. Now the big question is this:

Will the ACA Be As Popular In 2015 As It Was In 2014?

Over at the Huffington Post, Jeffrey Young is pessimistic. In a post headlined “Why Obamacare May Have Trouble Signing Up As Many Uninsured Next Year,” he quotes Richard Onizuka, the CEO of the Washington Health Benefit Exchange saying “we got the low-hanging fruit” last year. The people who most needed healthcare signed up right away. These include folks with pre-existing conditions, who had been shut out of the market under pre-Obamacare rules.

By contrast, in this second round of enrollment, Young points out that reformers will be trying to sign up people who are not desperate for insurance, and who may be harder to reach, including: “Hispanics . . . people who have less education, live in remote rural areas . . . don’t have Internet access or don’t consume news.”

Moreover, Young notes: “public opinion about the law itself is negative.” Indeed, nationwide polls show that approval ratings for Obamcare have been sinking in recent months. Reform appears less popular than it was when enrollment began in October of 2013. As a result, Young believes that enrollments will tumble: The CBO now predicts that just 7 million Americans will gain insurance in 2015.

But as I will point out in my next post, there are indications that in states where Obamacare enrollments have been most successful–including Red states – the Affordable Care Act (ACA) may be about to turn a corner, even among Republicans.

This explains why Republican Party leaders who decide how to spend campaign dollars have begun backing away from ads attacking Obamacare. The GOP senses that, going forward, bashing Obamacare will no longer be the best way to bash Obama. Too many people are finding out why reform is a good deal.

Ten Reasons Why Obamacare Will Cover Another 10 Million in 2015

Usually, I agree with Young—his analysis of health care reform is both fact-based and shrewd. But in this case, I’m not persuaded. I can think of at least ten good reasons to expect that another 10 million will either purchase Exchange insurance or join Medicaid’s rolls next year.

- The millions who have already signed up are now telling friends and neighbors about the benefits of Obamacare — including the fact that 87% of them received government subsidies that helped cover premiums. Polls show that while many Americans don’t trust the media’s conflicting reports about Obamacare, they do believe the information they receive from friends and relatives.

- Word-of-mouth will dispel rumors that continue to confuse potential customers. For example, In July a Kaiser Foundation poll revealed that 37% of those polled thought that under the Affordable Care Act, people had no choice of policies. They believed that anyone who bought coverage in an Exchange was shoved into one government-run plan.

- Amazing, when Enroll America conducted a survey in April, just after the first enrollment period ended, it discovered that 26% of those who had not signed up still had not heard that the government was offering financial assistance to low-income and middle-income people who bought coverage in the Exchanges. Those who did enroll were twice as likely to know about the subsidies (56% vs. 26%). In the months ahead, millions will learn more about true cost Obamacare as friends talk about what they are paying for their policies.

- Many will find that premiums are lower than they were in 2013, in part because more insurers will be selling policies on the Exchange, increasing competition. I recently received a letter from my insurer telling me that, next year the premium on my zero-deductible Exchange plan will be falling by 10%. As state regulators make final decisions about which increases they will and won’t approve, I will be writing more about how many insurers are dropping rates.

- In 2015, the Refuseniks will have to pay a fine that rises from 1 percent of yearly household income or $95 per person (whichever is greater) to 2 percent of household income or $325 per person. A family of four earning $70,000 would have to fork over $1,400—and receive nothing in return.Or that same family can sign up for a subsidy, pay part of the premium and wind up with comprehensive insurance that includes free preventive care, and caps out-of-pocket costs.

- This fall, it will be far easier to use the online websites than it was in the fall of 2013. By the end of the first enrollment period, most sites were working smoothly (though by then many would-be customers had given up). This year, there should be many fewer glitches because the administration has persuaded Mikey Dickerson, the Google engineer credited with fixing bottlenecks on the website last spring, to become the government’s full-time IT czar.

- The “navigators” charged with helping customers find plans that meet their needs, either in person, or on the phone, will be that much more experienced, and many will have received more training. There will also be more bi-lingual navigators available.

- Over the next year, more states will expand Medicaid. Political pressure is mounting: states that refuse to take the federal dollars that Washington is offering are leaving too much money on the table, and voters are hearing about it. In North Carolina, for instance, local newspapers are reporting that, over the next decade the state risks missing $51 billion in federal payments. Hospitals would get $11.3 billion of that amount. At present, North Carolina hospitals are threatening to lay off workers. If North Carolina expands Medicaid, another 400,000 Americans would be insured under the ACA. And that’s just one state.

- As low-income people who have joined Medicaid talk to their neighbors, more will become aware that the rules for eligibility are changing. We’re likely to see a major impact in the Latino community where language barriers have blocked government efforts to spread the word.

- More young adults will find out that they can sign up for a parent’s employer-based insurance and stay on it until they turn 27. A Deloitte survey of young adults reveals that in April, 45% still had not heard about this Obamacare benefit.

- The Kaiser Foundation’s July poll reveals that most people who actually signed up for Obamacare rate their policies as “excellent” or “good.” This, along with what I know about how the ACA is helping millions, is the major reason why I am convinced that as the newly insured share their experience with others, public support for health care reform will climb—especially among those who most need it.

- As I will explain in part 2 of this post, some affluent Americans who don’t need the ACA or its subsidies (because they already are covered by employers) may be inclined to remain nervous about Obamacare. But Americans who are wealthy enough to feel that they and their adult children are economically secure are a shrinking minority. This is the one good thing that can be said about growing economic inequality.

Originated at Health Beat Blog

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Widening wealth gap

Recent census date points to a Widening wealth gap:

The Census Bureau released updated data this week on the net worth of American households, drawn from the Survey of Income and Program Participation. These totals reflect all assets including money in checking accounts, owned homes, rental properties, 401ks, stocks and vehicles, offset by liabilities like mortgages, student loans, and medical and credit card debt. Below, I’ve charted the distribution of net worth by income quintiles for several groups: non-Hispanic whites, blacks, Hispanics and Asians, as well as households headed by workers with a high school degree or more.

The Census data suggest that the wealth gap in America has widened over the past decade, regardless of how you slice it. The gap between the bottom and top quintiles in America has widened, as has the gap between blacks and whites, and between workers with only a high school degree and those with much more.

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Government dependence

I remember in the late sixties and early seventies in the little suburb town where I lived in Ohio, the police chief had files on ‘potential threats’, including candle light vigil participants such as my parents.  Feelings of fear were common, and some quick to judge:

Mike Konczal takes a look back at some of the attitudes currently acted upon and displayed in the news:

Before it was anything else, the neoconservative movement was a theory of the urban crisis. As a reaction to the urban riots of the 1960s, it put an ideological and social-scientific veneer on a doctrine that called for overwhelming force against minor infractions — a doctrine that is still with us today, as people are killed for walking down the street in Ferguson and allegedly selling single cigarettes in New York. But neoconservatives also sought, rather successfully, to position liberalism itself as the cause of the urban crisis, solvable only through the reassertion of order through the market and the police.

The Unheavenly City’s most infamous chapter is “Rioting Mainly for Fun and Profit.” Fresh off televised riots in Watts, Detroit, and Newark, Banfield argued that it was “naive to think that efforts to end racial injustice and to eliminate poverty, slums, and unemployment will have an appreciable effect upon the amount of rioting that will be done in the next decade or two.” Absolute living standards had been rising rapidly. For Banfield, this was entirely the result of market and social forces rather than the state, and the poor, with their short time-horizons and desire for immediate gratification, would largely be left behind and always be prone to rioting. Today’s classic, if often implicit, repudiations of poor people’s humanity were clearly expressed here.

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