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

Repeal of the PPACA Vote On Hold

House leaders postponed a vote Thursday on their plan to overhaul the nation’s health-care system, casting doubt on whether President Trump and House Speaker Paul D. Ryan (R-Wis.) can deliver on one of the GOP’s central promises to the voters who placed Republicans in power.
Lawmakers and White House officials continued to express confidence that the revisions to the Affordable Care Act would pass by week’s end, and talks resumed soon after leaders announced the postponement. As evening came, members of the conservative House Freedom Caucus filed into the office of Speaker Paul D. Ryan (R-Wis.), as did White House Chief of Staff Reince Priebus and Trump’s chief strategist, Steve Bannon.”

It would be nice to snatch their healthcare at the same time or make sure some of those old folk get to pay for premiums at a 5:1 ratio. New CBO scoring after changes to the bill shows only $150 billion saved. Also the changes to the bill do nothing to prevent 14 million from being uninsured in the next year.

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Increased Penalties for the Uninsured Under the Republican’s AHCA?

Caroline Pearson at Avalere has a piece on how the House of Representatives AHAC healthcare program penalizes older and lower income people more so than higher incomes and younger people. Just to refresh your memory, the ACA penalizes people who do not have insurance based upon income.

While the penalties under the ACA are based upon income, the penalties under the AHCA are based upon age determinant premiums. Older people under the AHCA have higher premiums up to 5:1 of the younger insured rather than the 3:1 ratio under the ACA. Remember too, the ACA does not use age as a determinant of the size of penalty which is based upon income. While most likely the healthiest, many Millenials have lower incomes and could an have issues paying the penalty under the AHCA as the size of the penalty at lower income is a larger percentage of annual income. The impact of large groups of the younger and healthier Millenials not buying insurance could be felt in the risk pool potentially forcing higher premiums for everyone. Different than the penalty being paid to the government under the ACA, the penalty under the AHCA is paid to a private company. It will be interesting to see if this is be tested in court also

Younger Adults
Young Adults with Insurance

Older Adults
Old People with Insurance

If young adults are discouraged by the penalty and cannot afford to enroll, it could hurt the risk pool. While a recent RAND analysis showed that young people as a whole moving in or out of coverage may not have a large impact on the risk pool, the healthiest and least expensive young adults not enrolling could still result in a significant negative impact on the pool. A recent CBO report confirms a similar projection of those deterred from enrolling due to the continuous coverage provision will tend to be healthier and a penalty could have a significant negative impact on the risk pool and result in higher premiums. Certainly the size of the penalty regardless of income will have an impact as well as the age/premium factor.

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Should The Complacent Class Be Called The Fearful Class?

by Barkley Rosser  (originally from Econospeak)

Should The Complacent Class Be Called The Fearful Class?

Tyler Cowen has published his most successful book yet, The Complacent Class, now on the Washington Post nonfiction bestseller list and getting reviewed by everybody from The Economist to the New York Times and on.  It is the Book de Jour that all are commenting on one way or another.  Is America declining because so many of its people have become complacent?  (Shame on them.)

The book has much to offer.  It is chock  full of many interesting facts, although many of them Tyler has publicized at one point or another on his blog, Marginal  Revolution.  He even pushes some newly fashionable ideas that have been in the dark for too long, such as a sort of cyclical theory of history.  And he certainly makes the case that there are lots of trends that seem to show the American people not being as energetic or adventurous as they used to be, with headline data including reduced interstate migration, reduced changing of jobs, reduced patenting, and reduced entrepreneurial startups, among other things.  He does note some external matters that may be adding to some of this, with building codes and land use restriction in economically dynamic urban areas a big culprit as it makes it harder for many to take advantage of the high paying jobs in those areas.  He has also noted that we may be running out of new scientific knowledge to learn or discover, which makes it harder to find dramatic things to patent, and indeed he wrote a previous book about this, blaming this as a major reason for secular stagnation.

But the big question is whether the title is an accurate representation of what is in the book, which has come up in a series of inconclusive blogposts about “Who is the Complacent Class?”  Frankly, it is not clear  that there is one, or if there is one, they are not the people who are responsible for the data he puts forth as supposedly claiming there is one.  If there is a complacent class in the US, it is the top 1 or 2 percent of the wealth and income distribution, who get lots of attention, but who are not the people who are not moving across state lines or changing jobs.  That is going on in the other 98 percent mostly.

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No One Knows What It’s Like to be Paul Ryan

Who can tell us how he feels knowing that no one likes his health care reform ?
The Who can tell us how he feels knowing that no one likes his health care reform !

This is some cause for optimism, as we can note The Who’s further forecast that, by the last verse, he will recognize the importance of access to emergency medical care and the moral imperative to share with those in need.

No one knows what it’s like
To be the bad man
To be the sad man
Behind blue eyes

ryan

No one knows what it’s like
To be hated
To be fated
To telling only lies

But my dreams
They aren’t as empty
As my conscience seems to be
I have hours, only lonely
My love is vengeance
That’s never free

ryansad

No one knows what it’s like
To feel these feelings
Like I do
And I blame you

No one bites back as hard
On their anger
None of my pain and woe
Can show through

But my dreams
They aren’t as empty
As my conscience seems to be
I have hours, only lonely
My love is vengeance
That’s never free

ryanlaughs

When my fist clenches, crack it open
Before I use it and lose my cool
When I smile, tell me some bad news
Before I laugh and act like a fool

And if I swallow anything evil
Put your finger down my throat
And if I shiver, please give me a blanket
Keep me warm, let me wear your coat

coats

No one knows what it’s like
To be the bad man
To be the sad man
Behind blue eyes

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Meanwhile this is still going on during the week….

From Diane Ravitch’s blog:

While we’re consumed 24/7 with the Trump/Russia psychodrama, Republicans are quietly, under the cover of darkness and diversion, introducing these new bills in the House:

HR 610 Vouchers for Public Education — (The bill also repeals basic nutrition standards for the national school lunch and breakfast programs)
HR 899 Terminate the Department of Education
HR 785 National Right to Work (aimed at ending unions, including teacher unions)

And there’s more. Much more, including:

–HR 861 Terminate the Environmental Protection Agency
–HJR 69 Repeal Rule Protecting Wildlife
–HR 370 Repeal Affordable Care Act
–HR 354 Defund Planned Parenthood
–HR 83 Mobilizing Against Sanctuary Cities Bill
–HR 147 Criminalizing Abortion (“Prenatal Nondiscrimination Act”)
–HR 808 Sanctions against Iran

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Larry Summers: genius economist, failure at Psychology 101

by New Deal democrat

Larry Summers: genius economist, failure at Psychology 101

One of my recurring themes is how macroeconomic theory, no matter how elegant mathematically, consistently errs because it fails to take into account basic psychology — i.e., how the human animal actually works.

A big component of this failure is that humans, like other primates and apparently like just about every other social species, are hard-wired to inflict punishment on “winners” from inequitable distributions, even at cost to themselves. For a hilarious example of this, see what happens when an experimenter rewards one monkey with a cucumber while feeding another a delicious grape.
One such failure to take into account elementary psychology was on display in an article a few days ago, wherein Larry Summers, in the course of lambasting the rubes for trying to undermine global trade, concluded:

A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

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Paul Ryan not taking Phone Calls Faxes, or Petitions

A suggestion from Michael Halasy:

The Randian Congressman Paul Ryan has turned off ALL of his public telephones & fax machines in response to protests in favor of the Affordable Care Act, Planned Parenthood, Medicare, etc. He is also NOT accepting signed petitions and is TURNING-AWAY voters who deliver the petitions. So, let’s see what 67 million postcards looks like in his driveway. Please start mailing postcards to his HOME:

Congressman Paul Ryan
700 St. Lawrence Ave.
Janesville, WI 53545

Costs less than a buck to deliver this protest and makes sense to me.

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Saint Janet Yellen: The Best Fed Chair Ever?

by Barkley Rosser  (originally published at Econospeak)

Saint Janet Yellen: The Best Fed Chair Ever?

OK, so the immediate reaction of many to this title might be to laugh, but I challenge anybody reading this to name another Fed Chair who was clearly better than she is.  I do not think you can.  However, one reason why one may not think much about her is that things have been so inconsequential since she has been Chair.  Nothing much has happened.  She continued the Quantitative Easing for awhile started by Bernanke and then stopped it.  Inflation has remained below 2% mostly.  Growth has not been dramatic, but it has been steady and higher than in most other advanced market capitalist economies.  There has not been a recession since 2009.  There have been no bubbles and no crashes.  Nothing dramatic has happened and certainly nothing bad, even if lots of deep problems of the US economy such as inequality remain.  But that one is not the Fed’s responsibility anyway.  So, bottom line, she has been doing a great job even if everybody is quite certain Trump will replace her, with all kinds of candidate names being thrown around.  But none of these will be better than she has been.

So, going backwards her most serious rival might be her immediate predecessor, who  looks to have played a substantial role in the save of September, 2008 that involved buying a lot of eurojunk from the ECB, only to roll it off over the next six months or so.  Of course some of the more innovative things done then were coming out of the NY Fed, but Bernanke did an excellent job when the crisis hit.  At the same time, Janet was around during that period, initially as San Fran Fed president, and then later as Vice Chair.  But where Bernanke looks not so good is the runup to that crisis, where he seems really not to have seen it coming.  Who saw it coming and as far back as 2005 sounding the alarm about the housing bubble?  Oh, right. Janet Yellen.

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“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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