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

“Sit In The Back of The Bus, I want this Seat”

I grew up in the city of Chicago in the fifties and sixties. When I was going into the military, I saw the west side of Chicago burning as I returned my then girl friend back to her home. It is still hard to believe this type of discrimination would happen today as it happened then . . . and it is. Yet it is even harder to believe a lone white man would demand a seat from a black woman and tell her to move to the back of the bus in New York City. The African Americans kept their cool even with an obviously crazy old white man making racists demands on them.

which begin after the man asked her to move:

BLACK PASSENGER: Why?

WHITE PASSENGER: “Because the back of the bus is over there… I mean the black of the bus is over there.”

BLACK PASSENGER: “Excuse you?”

WHITE PASSENGER: “Yes, I want that seat.”

BLACK PASSENGER: “Why do I have to go to the back of the bus?”

WHITE PASSENGER: “I want that seat.”

BLACK PASENGER: “No, I’m not getting up cause you’re being… no… you’re being racist.”

His comment after everyone on the bus objects to his demands??? “This is why we need Donald Sterling.”

Many of us had witnessed what we thought to be the death of this type of overt and bold display of racism decades ago. You have to wonder whether recent societal views towards discrimination have created an environment for the reemergence of this type of public display. This person does not appear to be a skinhead or a KKK member and appears to be just an average male on a bus.

With a court that looks at discrimination as something which is in the past and laws are no longer needed; with a large segment of our political leaders and a greater portion of the population claiming they have the right to discriminate in day to day business or otherwise activities on race, sexual orientation, or gender; with an economy skewing productivity gains away from the majority of the population; We are heading to another point where there will be another city and economy burnt. We are squeezing the low income and minority population as never before and sneering at them with our Donald Sterling threats.

HT: FirebrandProgressive and Crooks and Liars

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Americans Raid 401(k)s

Angry Bear has carried posts on this issue over the years. 1. 2008 and draining the 401k pool of money, 2. Draining 401ks, 3. 401k and Social Security, 4.. Kenneth Thomas and retirements money (Links), 5. A 1000/mo pension equals 300,000 in savings among others.

Yves Smith at Naked Capitalism  makes an impassioned statement. (Re-posted with permission)

Americans Raid 401(k)s, Replacing Home Equity Withdrawals as Way to Make Ends Meet

It’s been creepy to see economists and the financial media cheering the re-levering by American households as a sign that they economy is on the mend and consumers are regaining their will to shop. But ordinary Americans took huge balance sheet hits in the crisis: the loss of home equity, which only in some markets has come all the way back; job losses and pay and hours reductions, which led many to run down savings as they readjusted; declines in stock market portfolios; lower income thanks to ZIRP for retirees and other income-oriented investors.

While the top wealthy are borrowing, in contrast to the behavior of the rich predecessors, on the other end of the spectrum, many are still struggling for survival. The latest job report showed that the number of long-term unemployed, reflected in the level of people who’ve given up looking for work and are counted as no longer in the workforce, only continues to rise. Food stamps and extended unemployment benefits have been cut. And with soup kitchens under stress too, one wonders how people who are in such dire financial straits manage to get by.

Before the crisis, if someone was hit with a financial emergency, like an accident or sudden job loss, those who had houses could often draw on home equity. With that piggybank depleted or non-existent, the last-ditch financial fallback is accessing retirement savings.

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Greg Mankiw thinks the VA is having problems.

I can not believe the nerve of  Greg Mankiw posting a blog about the Veterans Administration having problems.

He suggests giving Vets a voucher.

I suggest that he should apologize to all the Vets  for the War and Tax cuts policies that were implemented while he was at the White House that created the problem he is referring to.

But I guess Republicans do not believe they ever have to take the blame for the problems they create.

 

 

 

 

 

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Wasting One Life Away

A while back, I had written this: “One in 31 Adults”. As this was one of my first posts, Dan was kind enough then to post it on Angry Bear.

One in 31 Adults” (~2.3 million) are under the control of the correctional system according to a March 2009 Pew Center Report of the same title. 1 in every one hundred adults are imprisoned in jail, state prison, or federal prison. 25 years ago, those under the control of the correctional system was 1 in 77 adults as compared to 1 in 31 adults. If you factor in the numbers on parole or probation (~5.1 million [2007]), the numbers in jail, prison or on probation swell to ~ 7.3 million under some type of correctional/probationary control (2007).

What does the then growing prison and correctional population cost taxpayers? To support the then growing state prison population, costs ranged (it has only gone up) from ~$13,000 in Louisiana to ~$45,000 in Rhode Island annually (2005). The average was ~$23,000 annually, “US Imprisons 1 in every 100 Adults” NYT. The cost of imprisonment compares nicely to a state or private college education (another story which then I had not written about). As a whole the US imprisons a higher percentage of its population than any other nation in the world (and we still do such) from which the cost burden of housing prisoners has become an issue for states with a decreasing/stagnant economy and decreasing tax revenues. Paradoxically while costing the state more, jails and prisons for many communities are a stable and growing business employing people, services, and a fast growing part of the rural community economies.

If you want to see how prisons impact local communities, go visit Ionia, Muskegon, Kingsley, etc. Michigan; prisons/jails are the major employer in small communities and Michigan courts keep them full. Livingston County is building a $15 million extension to its jail to overcome crowding. Just like building a warehouse to house inventory, the county will fill it up. “If you build it, they will come.” Whack the prisons/jails and the towns dry up. The laws such as three strikes and drug possession for imprisoning nonviolent prisoners are antiquated. Fast forward to 2014 and this story of a man who was sentenced to prison and how they never came to get him while he was out on bond.

“Back in 1999, Anderson helped rob a Burger King assistant manager in St. Charles, Mo., with what turned out to be a BB gun. In May 2000 he was convicted of armed robbery and sentenced to 13 years in prison — but because of a clerical error, he never did the time.

While out on bail, he went on to become a law-abiding, happily married man with four children. After training as a carpenter, Anderson started a small businesses and built his own home from the ground up. On the weekends, he volunteered at his church, went fishing, fixed up old cars and helped his kids prepare for their spelling tests — ‘just normal, everyday, good stuff,’ he told Snow.

At first, Anderson lived every day wondering whether law enforcement might arrive and take him to prison.

‘For the first couple of years, yes,’ he said. ‘When I’m in the shower, I hear a noise, outside somebody closing the door, I’m thinking it’s them at the door every single day.’

Despite that anxiety, he did not turn himself in.

‘That was not me,” he said. “Prison is not me.’

Then, early one morning in July 2013, that day came, as law-enforcement officials descended on his home and hauled him away for failing to serve his sentence all those years ago. Anderson maintains that he was never a fugitive and he never hid his whereabouts from authorities.

‘We did everything we were supposed to do,’ Anderson told Snow. ‘We filed all the paperwork. My attorney (at the time) told them that I wasn’t incarcerated, that I was out on bond.’

Anderson told Snow that as the years passed, he registered his businesses with the state of Missouri, renewed his driver’s licenses, got married and even voted — all the while using his full name and his current mailing address.

‘A fugitive is someone that they’re looking for and that’s running,’ Anderson said. ‘I never ran, and they weren’t looking for me. … I used to think, ‘Maybe they just wiped the slate clean.’”

No, they did not wipe the slate clean, through clerical error they had lost Cornealious “Mike” Anderson in the state correctional system. If you ever want to see a low caliber operation, visit your prisons. I had to laugh when one guard was explaining to me how to secure a vehicle in a heavily patrolled area. In the early seventies, I chased prisoners for the USMC during the few months remaining of my enlistment. Existence in the state system for many workers is measured by how little you do.

Missouri caught up with Mike and they want their 13 years of prison-time-slice of his life. Mike is now sitting in prison today “It’s — it’s like my life is wasting away.” Considering what he has contributed to society over the last 13 years as a normal citizen making a living and paying taxes, Mike’s life is wasting away. Mike has gone from being a contributor in society by leading a normal life, raising a family, and paying taxes to a prisoner in a Missouri prisoner and the state and its citizens paying for his upkeep.

Thirteen years of making ~$40,000 annually or ~$520,000 in economic activity to 13 years @ $22,350 annually or $290,550 in cost to the state plus the loss of his salary for a total 0f $810,550 over the next 13 years plus welfare for his wife and 4 children. All just to get even with a person who made a normal life for himself.

“I gave my life to the Lord and he changed my mindset, gave me a new heart — changed my mind about the way I was living, the way I thought about things. And I just — I became a man.” This fits in with the religious culture one would see in this part of the state. It is also not unusual to see this reaction in prison where the prisoners become religious, especially when they are cut off from family, as they have no one else to turn to while there and they cling to anything. We have bought a few Bibles and teaching Bibles for prisoners from time to time and have probably stocked a library or two with our purchases of other books. Mike did this outside of prison when he really did not have to do so and he proved his worth. Maybe if he were white the reaction might have been different as back when the Pew Report was written, 1 in 11 adult African-Americans were imprisoned as compared to a lesser rate for Caucasians. The US imprisons more African-Americans then Caucasians.

We as a society really do some dumb things.

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Kudos to Ross Douthat for his rebuttal to David Brooks on Piketty. Now, who will rebut Douthat about recent tax-policy history?

It turns out that Paul Krugman is not the only NYT columnist/blogger who reads Angry Bear. Ross Douthat does, too!

Okay, seriously: Douthat’s delicate-ballet filleting of Brooks’s take on Piketty is priceless.

Now, maybe someone can fillet Douthat’s take on tax-rate increases for “Americans making (or inheriting) in the $100,000-$500,000 range,” which, he says, “is a demographic, it should be noted, that’s proven much more successful at resisting tax increases in the age of Obama than have the true plutocrats above them.”

Hmm.  You’d almost think it was the Republicans rather than Obama and the congressional Democrats who tried to restore to Clinton-era levels the Bush-era tax cuts for people in the $250,000-$500,000 range, and estate taxes, and that Obama and the congressional Dems put a halt to it. Unless, that is, you have no familiarity with the psychology term “projection.”  Or you just have a short memory.

This did happen in the age of Obama, though, so I guess it’s fine to suggest falsely that it was Obama’s choice. Obama orchestrated Republican obstructionism. Who knew?

And that Republican threat last December to shut down the government again, before finally acceding to some part of Obama’s tax-rate increases?  Or am I confused, and it actually was the other way around?

Elsewhere in his post, Douthat says the Democrats won’t propose higher tax rates on people in that income bracket because, if they do, people in that bracket won’t vote for them.  I guess he’s surveyed the many millions of people in that bracket who voted for Obama in 2012 despite his tax-increase proposals, and learned that they’ve had a change of heart since the election.

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Gail Collins (and me): Free Us From ‘Freedom’

To be fair, I don’t think Hannity had any idea about Bundy’s racial theories. However, it’s generally a good idea to be wary of lionizing people who go around saying: “I don’t recognize the United States government as even existing.”

Anyhow, Cliven was toast, although he did make an appearance on CNN, in which he explained that his racist remarks were all about — yes! — freedom. In this case, the “freedom to say what we want. If I call — if I say ‘negro’ or ‘black boy’ or ‘slave,’ I’m — if those people cannot take those kind of words and not be offensive, then Martin Luther King hasn’t got his job done yet.”

– Gail Collins, Of the Fox and the Cattle, NYT, today

I was happy, when I read that column this morning, to see that people are catching on to this rightwing “stick-the-label-’freedom’-onto-whatever-we-want-to-do” thing–this is very big at the Supreme Court these days–but now I’m having second thoughts.

I’ve always wanted a ranch out West.  And I don’t really recognize Cliven Bundy as even existing, nor the Recorder of Deeds in his county as even existing.  And if I can get a group of folks together who don’t either, I see no reason why I can’t fulfill my dream and have a ranch out West even though I can’t actually afford to buy one.

My dream involves horses, though; not cattle.  But there probably are some horse ranches in that county whose “owners” I don’t even recognize as existing, so while I don’t really want the land they claim is theirs–the Bundy ranch is big enough for my needs, and it looks nice–I’m sure my group and I can manage the horse-herding thing from one ranch to another.  At least as long as we have enough ammunition for our AK-47s.

The best part is that one of my senators–not Harry Reid; the other one–will be very supportive of me in this.  I can’t wait to vote for him in 2018.  If I haven’t shot myself with my semi-automatic by then.

I now want to see the Republicans regain control of the Senate.  So maybe I can convince the Democrats to feature ads quoting Heller on this whole freedom/Bundy issue.  I’m sure the Dems think that would scare some moderate folks into voting Democratic, so they won’t see my real purpose.  But I know better.  A lot of moderates want ranches in the West, too.

Wanna join me on the ranch?

 

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The David Brooks Phenomenon: He does ‘rewrite’ for Megan McCardle! [UPDATED]

Piketty wouldn’t raise taxes on income, which thriving professionals have a lot of; he would tax investment capital, which they don’t have enough of.

– David Brooks, The Piketty Phenomenon, New York Times, today

Alexandra Petri has a trademark-funny piece today in the Washington Post that she promises tells you “[e]verything you need to know about Capital — the hot summer beach read.”  She goes on to say that although many people will buy the 700-page book, and that many already have–Amazon is out of stock!–not many of those people will actually read it.  And that most of those lucky enough to already have a copy, have not read much, if any, of it yet.

So I’m wondering: Which category is David Brooks in? As a NYT columnist he probably had access to an advance copy before the book’s English-translation release. But since his claim that Piketty wouldn’t raise taxes on income sounds suspect to me–you can figure out from that comment which category I’m in–I wonder whether, rather than read the book, Brooks just Megan McCardle’s Bloomberg View op-ed three days ago, which Petri links to, and which reads as a rough draft of Brooks’s article.

McCardle, as Petri points out, says she has not read the book.  She also says:

What hasn’t improved [since the 1970s in America] is the sense that you can plan for a decent life filled with love and joy and friendship, then send your children on to a life at least as secure and well-provisioned as your own.

How much of that could be fixed by Piketty’s proposal to tax away some huge fraction of national income from rich people? Some, to be sure. But writing checks to the bottom 70 percent would not fix the social breakdown among those without a college diploma — the pattern of marital breakdown showed up early, and strong, among welfare mothers.

Maybe not.  So how about writing checks to, say, the University of Michigan, which back in the not-that distant past, when it received roughly 80% of its funding from the state, and large research grants from the federal government, had a student body that consisted of something slightly less than 125% that were from upscale households within the state or from Manhattan and Connecticut?  How about writing checks to the Detroit Public School system, or the Lansing Public School system, of the Kalamazoo Public School system, to hire teachers who have excellent credentials and pay them well?  How about writing checks for excellent mass transit systems between rural areas, inner cities, and thriving university and research towns like Ann Arbor?

Or how about writing checks for tutors and test-prep classes and informal community learning centers for children and adults?  Or for paid apprenticeships and internships?

You get the picture.  But Brooks does not.  He writes, not for the first time, about the appalling gap between the advantages that the children of educated professionals have and the children of working class parents.  He’s spot-on on that.  But does Piketty really say that taxes on non-capital “income” of the elite should not be raised? And can Brooks explain why income from capital should be taxed at a lower rate than income from labor? In typical Brooks fashion, he doesn’t even acknowledge that it currently is.

Piketty is French.  He is neither an American citizen nor an American resident.  He has spent all but (from what I can tell) about five years of his life in France.  His Ph.D. is from the London School of Economics, and his first teaching job was at MIT; he taught there for two years, 1993-1995.  If he doesn’t expressly recommend a higher tax rate on upscale American salaries and bonuses, might that be because it is only here in the United States where top corporate executes receive such huge compensation and where certain professionals are paid disproportionately well vis-a-vis those lower on the socioeconomic scale?  Piketty’s wealth-tax proposals are not narrowly prescriptive to the United States.

Ultimately, of course, it’s the specifics of Piketty’s research, not his policy suggestions, that make the book the phenomenon that it is. But I suspect that Brooks if wrong when he says that Piketty thinks taxes should not be raised on income of high earners in the United States.  I’ll have to rely on someone who’s read the book to correct me if I’m wrong.  I wish Paul Krugman read Angry Bear.

 

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UPDATE:  As Bruce Webb and Dan Crawford pointedly pointed out in the Comments, there are in fact strong forensic indications (I’m paraphrasing here) that Krugman does read AB.

Bruce:

Paul Krugman DOES read Angry Bear. For God’s Sake he cited me once and has referenced other Front Pagers as well.

AB consistently shows up in lists of top 20 most influential politico-economic blogs. that not so many of those top opinion makers take the time to stay and comment is not surprising. …

Dan:

Usually AB is cited 3-4 times by PK each year.

Actually, I knew that. I replied:

OK, OK, OKayyyy. Yiiikes. Can’t you guys take a joke?!

It’s no fair, though, cuz he’s never, ever cited ME. And until he does, it’s not official that he reads AB!

Unrequited love is so painful.

It is, Paul.  It is.

[Italics added; you can't italicize in the Comments.]

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Health Care Spending Spikes: Why?

You may have read that health care spending in the private sector picked up both in the fourth quarter of 2013, and during the first two months of this year. Recent data from the Bureau of Economic Analysis (BEA) show that during the last three months of 2013 spending on health care rose at an annual rate of  5.3%  The trend continued this year, with spending climbing 6.2%, on a year-over-year basis in January, and 6.7% in February,

This came as a surprise. Since December of 2007, after adjusting for inflation, health care outlays have been rising by only 2.6%  As former CBO director Peter Orszag observed in a Bloomberg column published yesterday,  “the sudden jump has led some some commentators to declare an end to the era of slower health-cost increases, which has lasted for the past several years. ”  Yet, Orszag notes, “Medicare spending growth is still low, even through last month. Indeed, in the first half of this fiscal year, nominal Medicare spending was only 0.6 percent higher than in the corresponding period a year earlier.”

Why have outlays risen for those under 65, but not for seniors?  BEA suggests that the jump during the first two months of this year reflects the fact that, thanks to the Affordable Care Act (ACA),  more Americans had comprehensive insurance that gave them access to a wide range of services.

Those who became insured in January and February are the folks who signed up at the very beginning of the enrollment period. No doubt many of them had been postponing needed care for a long time. As soon as they were covered, they began visiting doctors, scheduling elective surgeries, and filling prescriptions.

Going forward, won’t the fact that more Americans are insured mean that health care spending will continue to rise? Yesterday, the Congressional Budget Office (CBO) released a report that said “No.” The ACA will cost about $1 billion less than originally projected, the CBO reported, even though we will be covering more people. This is largely because premiums on the Exchanges turned out to be lower than expected.

Spending Spike at the End of 2013 May Well Be Temporary 

The uptick in January and February can be explained by pent-up demand but Americans began layout more for healthcare “well before January,” BEA points out. How does one explain the surge in private sector spending in the final quarter of 2013?

Some observers suggest that the spike in health-care spending that we saw during the last three months of 2013 may have reflected the panic that spread during the months before the ACA kicked in.. The Wall Street Journal’s  ”MarketWatch” puts it this way: spending  may have risen in the fourth quarter as consumers and companies prepared for the official rollout of the law on January 1. It might not  last.”

This makes sense.

My guess is that many people who knew that their policies were going to be cancelled in January used that insurance during the final months of 2013 because they didn’t know: a) whether they would find new coverage in their Exchange and b) whether they would like it as well as their old policy.

Keep in mind that in the final quarter of 2013, the Exchanges were not working well. Those who needed to sign up for new coverage were anxious, and the media was stirring the pot by telling them that, in the Exchanges, out-of-pocket expenditures would be sky-high. If you were thinking about having a hip replacement, you might well decide to schedule it in October, rather than taking a chance that under your new Obamacare policy, you would have to pay down a $10,000 deductible before your insurer laid out a penny for the surgery. Many people who couldn’t get through on the Exchanges didn’t even know if they would find new coverage.

In fact average deductibles and co-pays in the Exchanges would turn out to be relatively low. Only bronze plans come with high deductibles (averaging $5,081 a year). And just 19% of Exchange shoppers wound up with Bronze plans.

Sixty-two percent picked silver, and the average Silver plan calls for a deductible of  $2,905–40% lower than the average Bronze plan– and roughly $700 less than the typical deductible in the individual market pre-Obamacare.  Gold and platinum plans ask for even less cost-sharing. Many offer “zero-deductible” coverage. But in the fall of 2013, relatively few people knew the facts. They only knew what they heard on Fox. .

Meanwhile Americans who had received cancellation notices were worried, not just about out-of-pocket expenses, but about losing their doctors.  Reform’s opponents were warning that insurers selling policies in the Exchanges had created “narrow networks” of providers. Americans who bought new insurance might not be able to continue seeing the specialists they trusted. They might not have access to a hospital that they knew.This would be another reason to scheduled more appointments and procedures in the final quarter of 2013, while you could still use your old policy.

This also helps explain why Medicare spending did not rise in the final quarter of 2013: Medicare beneficiaries had little reason to worry about losing their doctors in 2014.

Going forward we may see another blip in healthcare spending as the newly insured receive care that they had deferred. But most of those who were anxious to see a doctor enrolled in the Exchanges in October, November and December, and began getting care in January and February. Those who signed up for insurance in during the final surge of enrollments are more likely to be young and healthy. My guess is that spending will slow next month.

Originated at The Health Beat Blog, Maggie Mahar

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SCOTUSblog’s Problem: It’s Not Incorporated [OK, I'm sure it is, but you get the point.]

Last week, the Senate Press Gallery denied SCOTUSblog’s application for a press pass, and advised us that it would refuse to renew the credential it had previously granted Lyle when it expires next month.  We were disappointed in that decision, and we are grateful for the support that we have received through social media, emails, and phone calls.

We thought it would be useful to write and explain the state of play regarding our credentialing.  SCOTUSblog is not now, and has never been, credentialed by the Supreme Court.  The Court’s longstanding policy was to look to credentials issued by the Senate.  We pursued a Senate credential for several years, modifying several policies of the blog to address concerns expressed by the Gallery.  Last year, we  finally succeeded – the Senate Press Gallery credentialed Lyle as a reporter for SCOTUSblog.  We then presented that credential to the Supreme Court, thinking that the issue was resolved.

But the Court declined to recognize the credential, explaining that it would instead review its credentialing policy.  The Court has not indicated when that review will conclude.

– An update on our press pass, Tom Goldstein, SCOTUSblog, this morning

I would joke about what happens to popular blogs when they start linking to blog posts by the likes of me on blogs like AB (talk about hoi polloi!)–or about SCOTUSblog’s need to incorporate so that it is an association of press citizens, or something (OK, I did do that in this post’s title)–but really, this isn’t funny.  At all.

Harry Reid, and also the Senate Judiciary Committee, should become involved the Supreme Court’s credentialing policy, which should not be left entirely to the Supreme Court to establish.

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Scotus Friday roundup

Pretty good company to be in!

Friday round-up

The Court’s decision on Wednesday in McCutcheon v. FEC, striking down the aggregate limits on contributions to political parties, political action committees, and candidates for federal office, continues to dominate coverage of, and commentary on, the Court.  Yesterday this blog kicked off its symposium on the decision with a foreword from Ronald K.L. Collins and David Skover; that was followed by commentary from Richard Hasen, Burt Neuborne, Ilya Shapiro, and Paul Smith.  Look for additional commentary today from Jan Witold Baran and Fred Wertheimer.  Coverage of the decision comes from Chris Geidner at BuzzFeed, Sahil Kapur of Talking Points Memo (here and here), ISCOTUS (video), Adam Liptak of The New York Times, PJTV (which has a video interview with me on the case), and Steven Mazie at The Economist’s Democracy in America blog.  Commentary on the McCutcheon decision comes from Dahlia Lithwick of Slate, Garrett Epps of The Atlantic, Beverly Mann at Angry Bear (here and here), and Michael Bobelian of Forbes.

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