Relevant and even prescient commentary on news, politics and the economy.

“Nothin’ but ‘blue skies’ do I see”

A little Ella Fitzgerald for you today. Kind of fits with what is going on in the US today.

Over at Vox, Matt Yglesias has an interesting article on the Trump Transition Team ordering government economists to cook up rosy economic forecasts. With his far reaching economic “it will be great” promises during the election, delusional Trump has laid out a “blue skies” future which is likely unobtainable with the past economic growth of less than 2%. Trump intends to get there with increased spending on military and infrastructure, tax reform, cuts in regulations, etc. and never touching Randian Paul Ryan’s favorite target of cuts to Social Security and Medicare. Still, The Fed and CBO are forecasting growth at less than 2% going forward.

The Transition Team has a plan . . . “a regulatory rollback and tax reform unleashing growth, driving a recovery in productivity, sending business investment higher, and drawing idled workers back to the labor force.” Trump asserts faster growth to be the result of regulatory rollback and tax reform and will result in economic growth soaring to 3 to 3.5% . . . well above the CBO and Fed’s reasoned estimates. All of this and no Fed interest rate increases forecasted as foreign funds will flock to the US to invest and fund this growth (think of the mortgage market pre-2008 attracting all the foreign money looking for safe haven after Greenspan nixed Fed Rate increases).

The Wall Street Journal’s Nick Timiraos suggests the numbers arrived at for growth were not arrived at by any process at all; instead, “the transition team gave CEA staff the growth target the budget would produce and told them to fill in data supporting the target and necessary to make it happen.” The logic could work if the end result, the target, is realistic. As Matt points out the deficit would be larger; but the economy would be 17% larger and the deficit as a part of GDP much smaller (hmmm, deficit growth . . . sounds like Reagan and Bush II all over again).

So, Trump has an overly optimistic budget based upon phenomenal growth which defies what every one else believes will happen and he will pass the budget to Congress. Watching everything else which has happened over the last 30 days; if Congress balks or does not find a way to make Trump’s budget proposal happen, similar accusations will be forth coming from The White House as to how Congress failed (think Appeals Court) to make things happen which impacts every citizen in the US. Everybody’s fault except his. Then too, Trump was left quite a mess . . .

Expect another week of listening to Trump complaining about how everyone failed him.

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Dumbest Statement Coming Out of Congress Yet on Healthcare . . .

A partial of the Republican plan:

introduced by Rep. Mark Sanford (R-S.C.) and Sen. Rand Paul (R-Ky.), would end Medicaid expansion, decouple health insurance from employers, offer a tax credit of up to $5,000 to fund HSAs, and eliminate most regulations on what health plans must cover. Insurers would be able to sell policies across state lines; regulations that mandate birth-control coverage would be nixed.

Hmmmm, that’s nice . . .

This is about the dumbest statement I have read yet by Senator Rand Paul;

“What if 30 percent of the public had health savings accounts?” Paul asked. “What do you do when you use your own money? You call up doctors and ask the price. . . . If you create a real marketplace, you drive prices down.”

“What if” we were all billionaires, able to buy the best care, and negotiate with multi-billion dollar hospitals? Yea “what if” . . . “What if” all the Senators and Congressmen, and Judges had our very same healthcare plan? Yea “what if” . . . “What if” all of those people fighting against the PPACA had really put some effort into learning about it, put the effort into forcing Congress to move forward with making it better . . . where would we be today? Yea “What if” . . .

Still love kicking the one layer deep naysayers around as they too will get a douse of what this is all about if ESI disappears as well as birth-control. Healthcare policies across state lines will be similar to what bank chartering is like with a couple of states controlling all the policies and no real competition (just like interest rates and usury).

“What if . . . “

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PPACA Repeal and How to Make Reconciliation Work for You.

In this post, I am going to expand upon the impact of the new House Rules H. RES. 5 upon the Repeal of the PPACA. As I explained here Paul Ryan deliberately changed the House Rules and the Republicans following party line approved them with the exception of 3 who voted with the Democrats. The House Rules went from just this:

“The Director of the Congressional Budget Office shall, to the extent practicable, prepare an estimate of whether a bill or joint resolution reported by a committee (other than the Committee on Appropriations), or amendment thereto or conference report thereon, would cause, relative to current law, a net increase in direct spending in excess of $5,000,000,000 in any of the 4 consecutive 10 fiscal year periods beginning with the first fiscal year that is 10 fiscal years after the current fiscal year.”

plus this additional statement:

“This subsection shall not apply to any bill or joint resolution, or amendment thereto or conference report thereon—

(A) repealing the Patient Protection and Affordable Care Act and title I and subtitle B of title II of the Health Care and Education Affordability Reconciliation Act of 2010;

(B) reforming the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010.”

neatly hidden away on pages 25 and 26 of 115th Congress House H. RES. 5.

Ok, so the Republicans are up to their old craftiness of slipping it to the Democrats when they want to block something the Democrats have done in the past. There is reason to why Congressman wants to block the CBO from reporting on this. It deals with making it more difficult 10 years down the road to change the repeal.

If you remember, Bush’s tax cuts were passed using Reconciliation and the CBO did a cost analysis showing it would create a deficit. Using Reconciliation to pass a bill, the legislation passed and creating a deficit must expire in 10 years. Bush’s tax cuts did create a deficit and a big one much of which was reversed by Obama.

For sure, Congressman Paul Ryan knows the repeal of the PPACA will create a deficit and Republicans know the repeal will create a large deficit. To make sure no one else knows, Mr. Ryan has blocked the CBO from analyzing it before repeal. Also unbeknownst to many, if the CBO does not do its typical independent analysis of the costs (if any) created by the PPACA repeal and how much it increases the deficit, there is no requirement for the legislation to expire after 10 years. Republicans would have repealed the PPACA as they have wanted to do since 2010, and would have blocked it from ever coming back after 10 years.

Crafty little weasel that Mr. Paul Ryan!. Then too Mr. Rand Paul is ready to sell you his healthcare policy (Obamacare Replacement Act) which does cover pre-existing conditions up to a guaranteed two years. After two years, and miss a payment or your healthcare insurance lapses and the healthcare insurance company can charge you the going rate just like the good-old-days. Also keep in mind, “Americans will never learn how devastating the PPACA repeal will be to Medicare’s long term solvency that was extended a couple of decades because of the Affordable Care Act’s execution.”

Where are the Democrats in all of this?

GOP Prohibits CBO From Reporting How Much ACA Repeal Blows Up the Deficit RMuse, Politicus usa January 11, 2017

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Constitutional Crisis ?

To Recap what everyone knows now (in case anyone reads this months from now)

On January 27th Donald Trump signed an executive order suspending the refugee admission program for 120 days and blocking US entry for citizens of 7 countries for 30 days.
The order was written without input from the Justice, Homeland Security, State and Defence departments. As written it banned entry for legal permanent residents (with green cards) who were travelling abroad when it was issued. It also banned entry for people who were on airplanes flying to the USA when it was signed.

On January 28th dozens (to hundreds ?) of people were detained in Airports. Tens of thousands of ordinary Americans went to the airports to protest the new policy (there is hope). Also hundreds of lawyers spontaneously went to airports to attempt to represent (pro bono) the people who were detained and at risk of being put on planes returning to the foreign point of departure.

Early January 29, some aspects of the execution of the executive order was temporarily stayed by a judge


Judge Ann Donnelly of the U.S. District Court in Brooklyn granted a request from the American Civil Liberties Union to stop the deportations after determining that the risk of injury to those detained by being returned to their home countries necessitated the decision.

3:00 AM January 29th, the Associated Press reported — something. It is not clear to me if the recent event is a constitutional crisis or just an absurd lie alternative fact.

The Ap reported

Stephen Miller, a senior adviser to the White House, said that nothing in the judge’s order “in anyway impedes or prevents the implementation of the president’s executive order which remains in full, complete and total effect.”

If Miller meant what he said, he has declared that the Trump administration will order the executive branch to ignore the stay (that is the only way the order could remain in “total effect”. If so, there would no longer be rule of law in the USA. There would only be Trump’s orders and the decision by people in uniforms whether to obey them.

I am fairly confident that the US is still a nation of laws. I think that Miller’s statement is a simple blatant lie not the declaration of a coup. I think he is sayign that the Judges order would have no effect even if it were obeyed. I am pretty sure Miller is insisting that Donnelly didn’t order what Donnelly ordered.

In contrast the more official response by the DHS noted that the stay applies only to people in the USA or in the air at the time it was granted.

Also the DHS didn’t mention legal permanent residents. It is very clear that the DHS can’t block their entry to the USA. In fact, it is known that the DHS argued this immediately and was over-ruled by White House staff. The application of the order to legal permanent residents is very clearly blatantly illegal. Arguably, the executive order is completely illegal, but to ignore green cards is very clearly illegal.

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Paul Ryan Can Not Take the Truth So He Hides It with Legislation

Paul Ryan and other House Republicans voted along party lines “Adopting rules for the One Hundred Fifteenth Congress.” The vote was 234 Yeas to 193 Nays. Three Republicans voted with Democrats to block the new rules for the 115th Congress. No big deal, right? and the New Rules passed.

As many of you probably know, I have been writing about the PPACA/ACA/Obamacare since 2008; answering questions, presenting information, and rebutting the stories, outright lies, and silly remarks. I did a lot of Maggie Mahar’s editing to get her columns up on Angry Bear and subsequently became familiar with the healthcare law. Now before you attempt to get into this with me, I will say this; “it was not perfect; but, it was all we had for the time being.” Now we are going backwards. We will be worse off under the new healthcare law.

Typically, this is not big deal except Randian Paul Ryan stuck a couple of sentences into the new House Rules. Before I get there, I want to take this a step backwards and explain. I was angry enough after reading the Rules Change to write my Congressman Mike Bishop. This is unusual for me as it typically is a waste of time. They represent upwards of 700,000 people in high density states. It was never supposed to be that way until Congress decided to freeze the number of Reps in the House. If the number of constituents represented had stayed at 60,000; my vote and opinion would have counted for more when drop kicking him across the room. There is a reason they did this and if they did not do this, the number of Reps would have been much higher.

I wrote Congress Person Mike and started explaining how Senator Sessions with the help of Rep Upton also from Michigan wrote the GAO asking why the HHS could appropriate funds. The GAO said they could not; but, the GAO left an opening for the HHS and the Administration by stating they could transfer funds from other programs into the Risk Corridor program. The Risk Corridor program for the PPACA is a 3-year program. Since there was a lot of risk for insurance companies and Co-ops, it was established along the same lines as the one for Part D Medicare which the Republicans created. An insurance company was limited to 3% profit,. If you made more than that, you kicked into the program a ratio of those profits. The higher the profit, the more you kicked in. If you lost money as the new Co-ops did, the program gave them money if the loss was greater than 3%. The CBO estimated the Risk Corridor program would generate $16 billion over its 3 year life time. Companies were taking on people who were denied insurance before due to pre-existing conditions. It was a higher risk and no one could be sure how many high risk insured they would get. They could not deny insuring them or increase premiums. This worked well for Part D.

Session and Upton were able to make the Risk Corridor program budget revenue neutral so the HHS and administration could not appropriate funds for it. They enlisted the aid of Rep Jack Kingston Appropriations Panel Chairman who stuck a sentence in Section 227 of the 2015 Appropriations Act (dated December 16, 2014). The sentence said; no

“funds made available by this Act from the Federal Hospital Insurance Trust Fund or the Federal Supplemental Medical Insurance Trust Fund, or transferred from other accounts funded by this Act to the “Centers for Medicare and Medicaid Services–Program Management” account, may be used for payments under section 1342(b)(1) of Public Law 111-148 (relating to risk corridors).”

If you are wondering why Co-ops went bankrupt, healthcare premiums started to go up, insurance companies withdrew, and insurances companies lost millions; here is the reason why. So I laid this treachery on Congressman Mike Bishop.

I then proceeded to tell him that under reconciliation, you can not create a budget deficit. This would happen with the repeal of the PPACA. In Summer of 2016, the CBO estimated it would be ~$350 billion.

Now, back to my Roll Call on New House Rules. Randian Paul Ryan stuck a few sentence into the House Rules for the 115th Congress. Here is what they said:

“This subsection shall not apply to any bill or joint resolution, or amendment thereto or conference report thereon –

(A) repealing the Patient Protection and Affordable Care Act and title I and subtitle B of title II of the Health Care and Education Affordability Reconciliation Act of 2010;

(B) reforming the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010.”

In simple English here is what it meant; the CBO could not review the Repeal of the PPACA and the costs associated with it. My question to Congressperson Mike Bishop was; “Why did you vote yes to this knowing you were covering up the truth and creating a budget defict?”

Not that I will get one; but, I asked for a return reply.

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Equality in Retirement

Sarah Anderson and Scott Klinger of the Institute of Policy Studies released “Tale of Two Retirements”, a study discussing how well CEOs will retire in comparison to the low and middle income citizens who only have 401ks and Social Security to retire on in the US and what President-Elect Trump’s actions will do to CEO retirement.

invisible hand

One hundred CEOs have company retirement funds worth approximately $4.7 billion or a sum equal to the entire retirement savings of 41 percent of U.S. families with the smallest nest eggs.

The $4.7 billion total is equal to the entire retirement savings of:

59 percent of African-American families
75 percent of Latino families
55 percent of female-headed households
44 percent of white working class households

The average of the top 100 executives is enough to generate an ~$253,000/month life time check.

In comparison:

• Ordinary workers have ~$18,000 of 401K savings or enough for ~$100 in a monthly payout.
• 39% of workers 51 to 61 years of age have no employer sponsored retirement plan and will be mostly dependent upon an ~$1200/month Social Security check.

Many CEOs have tax-deferred accounts totally with ~$3 billion in deferred payout. If President-Elect Trump cuts the marginal tax rate, they will also gain in retirement funding.

• Cutting the top marginal tax rate to 33 percent, Fortune 500 CEOs would save $196 million on their income taxes.
• These deferred payout accounts are also exempt from 401k contribution limitations

.

Mirroring the same racial and gender gap exiting today in business, white male CEOs have done better than their minority male and their female counterparts.

• The top 10 white male CEOs have a combined $1.4 billion in the tax deferred compensation accounts
• Eight times more than the top ten minority male counterparts and five times more than the top ten female counterparts.

Top 10 White Male CEOs

I want to take a moment and dwell on this topic a bit more. While some readers are distracted by immigration and its impact on the economy, they ignore the crop-picking, laboring, and housekeeping jobs where many of these immigrants end up. We are losing sight of some real issues plaguing the middle income bracket making less than $100,000 annually which comprises most of the population.

“Just” 50% of the American Labor Force are offered a 401K in which to set aside money in for retirement. The maximum contribution to date for most who have a 401k is $18,000 annually with an exception for older workers who get bumps up to $24,000 annually, if . . . if you are making enough to be able to set aside the initial amount and more if older. It is a tease from the beginning and worse now with stagnant incomes. If I do not set a minimum aside, I am in deeper trouble when I am older. If I do set this aside now and I have a college loan, can I have a life, married life, and a family? Which would you choose if the potential was there to set this aside now? The choices are not easy and we are seeing the results as more people go on SS with college loans still outstanding and have their SS garnished to pay them off.

Top Ten CEO (Clink on the chart to make it larger and for clarity.)

As the report details, CEOs have few if any limits to set aside taxable retirement income and more have the income to set aside. As a perk, many CEOs are given tax deferred accounts in which companies do not pay taxes until the funds are withdrawn. In the mean time the executives benefit from tax free compounding investment returns. As proposed if President Trump decides to do so, a reduction in the maximum income tax bracket from 39% to 33% because it might (laughing) create jobs, the very same executives stand to make an unearned jump in income. “At a 39.6 percent income tax rate, they would owe $1.2 billion to the IRS and at a 33 percent rate, they would owe $979 million, for a combined savings of $196 million.”

Whether $1.2 billion or 979 million, $millions in taxes are lost yearly to states and the federal government due to Tax-Deferred accounts.

• In 2007, the Senate passed a minimum wage bill that would have limited annual executive pay deferrals to $1 million, but the provision was dropped in the conference committee. According to the Joint Tax Committee, the measure would’ve saved taxpayers $806 million over 10 years.

• In 2015 alone, 215 Fortune 500 CEOs invested a combined $227 million more of their pre-tax income in these plans than they would have been able to invest if they’d been subject to the maximum $24,000 cap that applies to ordinary workers. If they had been subject to this limit, they would’ve owed the U.S. Treasury $90 million more in income taxes last year.

What is surprising is how many are willing to defend this type of compensation calling it theft if taxed. Yet this type of compensation is limited to 1% of the population and numbering less than 1 million people. At the same time, the same people defending huge salaries will decry the loss of jobs in the US going overseas or automated which many executives are handsomely compensated for in the name of cutting cost and increased profits. We also have a president today who is promoting a populist agenda and telling people he will bring back the jobs whether automated out of existence or resourced out of the country by the executives of companies. While there may be a few jobs saved over the next 4 years, most will still be quietly moved or automated.

I am sure you have noticed the all star team for promoting the well being of the nation beyond what Sarah Anderson and Scott Klinger of the Institute of Policy Studies has reported on is being assembled in Washington DC by President D. Trump. Beyond the scapegoating and misdirection promulgated by President Trump in his inaugural speech, this team is just another example of chutzpah beyond Trump’s absolutely, awesome, and amazing (it will be great) standards expressed during the runup to a momentous inaugural day. As identified, there is a group of people who have been sucking up the economic gains that should be going to the middle class and President Trump has surrounded himself with them . . . the billionaires and multi-millionaires in his cabinet. No other populist administration has gone to this extreme in selecting a group so dedicated to their own well being.

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Aurora, Colorado; Republican Congressional Representatives in Action

In Colorado, on Saturday, Republican Rep. Mike Coffman held an event for his constituents at a
Coffman a public library in Aurora, Colorado. At least 150 constituents showed up, most of them hoping to ask Coffman about his recent vote to repeal the Affordable Care Act and his plans for a replacement. But only about 70 people got to meet with Coffman: Despite booking a large room with ample space, Coffman allowed in only four constituents at once for five minutes at a time. When the crowd grew restless, police put up crime scene tape and Coffman snuck out the back door—six minutes before the event was scheduled to end.

Coffman co-authored a Denver Post op-ed on Friday urging the full and immediate repeal of the ACA. About 419,000 Coloradans have gained health care coverage since the enactment of the law, and many of them stand to lose their insurance if it is repealed. Yet Coffman has not proposed a clear replacement for the law, an issue constituents hoped to ask him about on Saturday. “I am potentially going to lose my health insurance,” Berthie Ruoff told NBC 9 while she waited to meet with her representative. “I’ve had a preexisting condition. I’ve had breast cancer. What’s going to happen to me? My spouse who had health insurance passed away. What do I do? You know, what am I supposed to do?”

But neither Ruoff nor many other constituents who stand to lose coverage had an opportunity meet with Coffman. When it grew clear that Coffman would refuse to meet with a majority of those at the event, the crowd channeled its agitation into patriotic songs:
This show of unity, however, did not impress Coffman. Indeed, it appears to have scared him: Rather than address the crowd, Coffman had police officers secretly escort him out of the back door before the event was set to conclude.

A few people noticed Coffman sneaking out and attempted to address him. “Next time,” one woman pleaded, “please be sure you hear all your constituents!” Coffman ignored them, hopped into a waiting car, and drove away.

“Have a good afternoon!” yelled another exasperated woman.

GOP Rep. Sneaks Out of Townhall Meeting, Mark Joseph Stern, Slate, January 15, 2016

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Millions Are Uninsured

When People claim “Millions Are Uninsured Under the PPACA,” it is a garbage statement meant to elicit a negative reaction without going into the detail of who is uninsured and why. Repeatedly Charles Gaba, Maggie Mahar, Commonwealth Fund, Urban Institute, Kaiser Foundation, etc. have explained the numbers and the whys of the uninsured, most of which are not the fault on the PPACA.

I see commenters come to AB and outside AB discussing the uninsured. Some being legitimate bloggers claim “millions are uninsured” and some have exaggerated it even more with citing “tens of millions” with their credibility disappearing as they can not recite the make-up of or the reasons for the number as they do not know it or are trying to make a political statement. The latter being worst than the ignorance of the former.

invisible hand

There are reasons for the uninsured as detailed by Kaiser Family Foundation. For example, Republican states which do not allow expansion of Medicaid accounts for 2.6 million, undocumented citizens 5.4 million, those eligible for Employee sponsored insurance 4.5 million, and 3.0 million who could have unsubsidized insurance. Then there are 6.4 million adults and children eligible for Medicaid and another 5.3 million eligible for Premium Subsidies and for some reason have not chosen to be insured. Some states like Michigan do make it difficult to enroll in Medicaid. These are the Kaiser numbers for 2016 and they total ~27 millionfor uninsured and why. A “tens of millions” uninsured is a BS numeric when we start accounting for Republicans blocking Medicaid Expansion in states, undocumented immigrants, ESI available insurance, 6.4 million eligible for Medicaid, and another 5.3 million eligible for subsidies. Other than undocumented citizens and states blocking the Medicaid Expansion, there is access to healthcare insurance in one form or another through the PPACA, much of which exists today due to the PPACA, or Employer Sponsored Insurance. When we account , the number drop as there are those without subsidy who chose not to be insured, others who could be on Medicare or have Premium subsidies, and those who could have Employee Sponsored Insurance.

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