It’s (also) the interest rates, stupid!
(Dan here. NDD takes a shot at one reason for the loss of Democratic candidates in this election.)
It’s (also) the interest rates, stupid!
You know the old saw, “it’s the economy, stupid!” Both Robert Reich and Atrios have boiled last week’s election results down to that maxim.
Atrios said, “It isn’t really a big mystery why people still aren’t thrilled with the economy. The foreclosure crisis and the great recession destroyed lives, and opportunities for The Kids Today are pretty crap.”
Reich blames median household income:
If you want a single reason for why Democrats lost big on Election Day 2014 it’s this: Median household income continues to drop.This is the first “recovery” in memory when this has happened.Jobs are coming back but wages aren’t.
While I agree with his prescription:
[Democrats] have a choice.
They can refill their campaign coffers for 2016 by trying to raise even more money from big corporations, Wall Street, and wealthy individuals.
And hold their tongues about the economic slide of the majority, and the drowning of our democracy. Or they can come out swinging.
I disagree about using the metric of median household income, since your 75 year old Uncle Earl and 85 year old grandma are counted in that statistic, and there are a ton more Uncle Earls and Grandmas than there used to be (more on that below); and among 25 to 54 year olds it tracks the employment to population ratio nicely.
While the lack of a platform that speaks to younger voters was certainly an issue, I believe almost all commentators have overlooked another crucial component of what happened last week — interest rates.
You’ve probably seen this graphic already from ABC news, showing the skew among age groups over the last 5 elections. Note that younger voters constituted 12% of the electorate in each of that last 3 midterms.
But look at what happened with the 60+ cohort: it grew from 23% in 2006 to 32% in 2010, to 37% in 2014!
Not only has the midterm electorate skewed heavily towards senior citizens in the last 8 years, but the senior citizen cohort itself has become more conservative. The reason? Most people arrive at their basic political orientation at about age 18, and never fundamentally change. In 2006, 65 year olds had turned 18 in 1959. In 2010, that was 1963. This year it was 1967.
Now let’s look at how 18 year olds political orientation has changed over time:
In 2006, there were still some FDR era voters around. By yesterday, they had all but disappeared, replaced by an island of JFK era 18 year old blue voters amidst a red tide of Truman, Eisenhower, and LBJ voters. In other words, the 65+ year old cohort that went to the polls in 2014 was the most conservative in several decades. (PS: Note that Obama turned 18 in very red 1979, which might not be a coincidence with his apparent veneration for Reagan).
And what do elderly voters care about? It isn’t jobs, and it isn’t wages. After all, they are almost all retired!
No, what they care about is the interest rates their CD’s and money market accounts are earning, and the COLA adjustments to their Social Security.
And there, the news has been abysmal for the last 6 years.
Here’s the rate on CD’s from 2008 to the present:
And here’s the COLA adjustment to Social Security in the last 6 years:
Average CD rates have run no higher than 1%. Social Security COLA has averaged 2.2%.
Now here’s inflation (and keep in mind that there is evidence that seniors probably face higher inflation rates for what they buy):
For the last 5 years, inflation has averaged about 2% a year.
Obama and the democrats are seen as having bailed out Wall Street in 2009. Meanwhile savers and those on fixed incomes have taken it in the chops.
So let’s review:
- A burgeoning midterm electoral cohort
- skewing more conservative than in several decades
- that is the prime viewership for Fox News
- took it in the chops on their savings and, to a lesser extent, Social Security.
- They blamed Obama and the democrats.
Last week, they got even.
As I wrote a while back, the biggest impact on who goes to the House of Representatives is how the states are redistricted. Michigan voted 54% Dem for Obama. Yet we sent fewer Reps to the House then the Repubs. By rights and with proper redistricting, we should have had 7 to 9 Reps in the House instead of 5.
The Repubs have controlled the Michigan Legislature three times in critical redistricting years of 1990, 2000, and 2010. Districts were gerrymandered and packed. Michigan is one of seven swing states.
By the way; this is a pretty good interactive graph of politics by birth year. http://www.nytimes.com/interactive/2014/07/08/upshot/how-the-year-you-were-born-influences-your-politics.html?abt=0002&abg=0 . Those born from 1955 to 1981 have a majority of Republicans.
Interesting. I always wonder why seniors vote GOP other than just the natural tendency to be conservative–yearning for the “good old days” — when it is the GOP that wants to gut social security and medicare. Okay, I know that Obama does too, but most Democrats don’t and almost all Republicans do, so why on earth would the average senior vote against, for many, their survival? I had not focused on the interest rate aspect and the low cola increases because of low overall inflation. Maybe somebody should have pointed out to them, particularly the young ones, that social security will have to start paying reduced benefits sooner rather than later unless we get more people working at better wages.
Take a look at the link I provided. It is not as clear as you think.
Being a Senior, I can attest to being a fiscal conservative. That’s not the only and may not be the major driver in my decision making. You see, seniors also think in terms of what can I do for my kids/others? You would think that would naturally put us in the Democrat camp, but it seldom does. We are sensitive to how much the government takes from our incomes and which channels it is then passed back. We are independent and like it that way, and are concerned at how the government has created a class of dependent citizenry. That class is growing and requires more an more government support.
Seniors also live within their means. They have to! Those on the fringe of that ability are the seniors that are sensitive to interest and COLA rate changes. The majority are not so concerned except to do actuarial calculations as to how far they are from that fringe position.
So I would say for seniors being aware of what and how the government taxes/spends is more important to the average senior than interest/COLA rate changes. When they both go negative then the party in power is blamed. Happened in 2008.
Seniors are acutely aware of their life’ end being close. ACA has impacted that ending for many. Add to that how the ACA was passed and implementation screwed up, seniors take away a bad taste. They are the class targeted with reduced benefits under the ACA, and focus on reduced spending at their life’s end. Increased taxes, and some emphasis on the death taxes, also effects their life style and end of life decisions, living trusts versus simpler wills.
So in one phrase it was democrat policies, and not the interest/COLA change rates. This is the era of the Tea Party. Why is it ignored as a political motivator?
“Those on the fringe of that ability are the seniors that are sensitive to interest and COLA rate changes. The majority are not so concerned except to do actuarial calculations as to how far they are from that fringe position.”
Were your description of seniors weren’t also on the fringe. http://www.advisorperspectives.com/dshort/updates/Household-Incomes-by-Age-Brackets.php
Ironically it is Social Security that boosts income streams above the poverty level for many, and Medicare that provides the margin of safety for many.
However, policies matter, and perception of what policies do matters. So then we get into the psyche…
Lets break this: “They are the class targeted with reduced benefits under the ACA, and focus on reduced spending at their life’s end. Increased taxes, and some emphasis on the death taxes, also effects their life style and end of life decisions, living trusts versus simpler wills” down.
– “They are the class targeted with reduced benefits under the ACA” as opposed to paying many more times the norm under the old healthcare insurance system? At least there is a limit to how much can be charged in premiums for healthcare insurance and there are subsidies for premium and deductibles if they are living on the fringe for those not on Medicare. Before they could not afford the benefits and often times went without healthcare as they did not qualify for Medicaid under state guidelines either.
– “focus on reduced spending at their life’s end.” 2008 played hell with many of us except those in the upper income brackets who suffered the advantage of the 2001/2003 tax breaks.
– “Increased taxes, and some emphasis on the death taxes,” Are you that wealthy in income and assets? Do you have in excess of $5 million in assets (I believe over that amount is what they are taxing now in inheritance)? If not, then you are safe from inheritance taxes and again are a part of the upper brackets. If you are a small business owner making >$250,000 in profits, you are 2% of the total and those below $250,000 were not impacted by tax increases.
– “effects their life style and end of life decisions.” It “might” impact the 2% of the taxpayers making that much and are over the limits for inheritance as they will pay more tax; but, the rest of us will die in the same manner with no impact whatsoever.
Dan, I accepted Social Security and Medicare as given inputs to senior financial streams. You’re making a strawman argument here.
I agree that you got my point: “…policies matter, and perception of what policies do matters.” The ACA is a policy that catalyzed and organized conservative action. Those actions have resulted in election losses for Dems with the exception of Obama.
Conservatives already knew what Gruber has been caught admitting. Its Dem/liberals that are hurt most. Policies, policy perceptions influence elections, and very bad policies have sustained effects. Until the ACA is fixed expect additional election impacts, and increased senior turnouts. Its not about interest/COLA rates. They are at best secondary considerations for most seniors.
Who’d ever thunk I would regret that CoRev posted anything outside of climate change?
To sum up.
Seniors are independent and like it that way, but of course SS and Medicare income streams are a given, so let’s just ignore them.
You have any idea of how minor the Medicare “cuts” were to actual seniors?
Gotta love the idea that seniors voted against the Dems because of the ACA, while somehow voting for the Reps despite Ryan’s Roadmaps.
That molehill was really important, but that mountain means nothing.
The funny part is that the Rep’s mountain included Obama’s molehill.
Run, most of your response is unrelated to the actual point made. For instance: “- “focus on reduced spending at their life’s end.” 2008 played hell with many of us except those in the upper income brackets who suffered the advantage of the 2001/2003 tax breaks.”
This is the whole thought: “Seniors are acutely aware of their life’ end being close. ACA has impacted that ending for many. Add to that how the ACA was passed and implementation screwed up, seniors take away a bad taste. They are the class targeted with reduced benefits under the ACA, and focus on reduced spending at their life’s end.” This is about seniors and their ACA policy perceptions. You failed to recognize any of that.
EM, your comment is a strawman is spades: “Seniors are independent and like it that way, but of course SS and Medicare income streams are a given, so let’s just ignore them.
You have any idea of how minor the Medicare “cuts” were to actual seniors?”
You can accept this as an absolute: “Seniors are independent and like it that way,…” Ask a senior their wishes to be NO BURDEN to their children/family. As evidence, go to a hospice and see how many seniors they are ministering to which have decided death is preferential to continuing. Just like that terminally ill 29 YO woman who moved to OR to die at her time and method, it happens much more often for seniors.
What has the medicare cuts have to do with senior’s opinion on the death panels and rationing of senior access to health care at their very end? Those are real world issue to seniors.
No, I answered your sentence “They are the class targeted with reduced benefits under the ACA, and focus on reduced spending at their life’s end. Increased taxes, and some emphasis on the death taxes, also effects their life style and end of life decisions, living trusts versus simpler wills” as a senior citizen >65 might answer it. If you are over 65 you are not impacted by the ACA as you have Medicare Part A and Part B, Supplemental Insurance, and Part D the later two if you so desire. Advantage is subsidized by the gov for many of the same benefits offered under Medicare and was too costly.
Furthermore, my answer was not that one sentence, it was several as your statement needed further explanation. That I did answer it in such a manner was meant to refute your blatant over simplification on the ACA having an impact on seniors which it has not done anything to those >65. For those seniors <65, at least now they can get insurance which was prohibitively expensive before the PPACA. Healthcare insurance companies can not longer deny them insurance because of their age or pre-existing conditions. Furthermore, states can not deny them access to Medicaid if the states expanded it. If states did not expand it, the Gov has granted them access to the PPACA under special circumstance due to stupidity in the state in which the senior reside.
As a senior, I think I under stand your position quite well. You have yours and screw everyone else. I hope you have something substantive as you argument is banal and weak.
Run, we have differing opinions of the value of the ACA. If you note, my earlier comment was: ” Until the ACA is fixed expect additional election impacts, and increased senior turnouts.” Fixing a severely flawed piece of highly partisan legislation is an issue. If you think otherwise then your arguments are specious and naive.
That piece of legislation and the way it was passed fostered the creation of the Tea Party movement. If you think the motivations and emotions behind that movement are minimal then think back upon the past elections.
If you think many seniors do not subscribe to the Tea Party movement, then think back to this last election. That single piece of legislation and the policies, implementation and out right lies will be an anathema to democrats until it is fixed.
No I disagree on the start of the Teaparty Movement. Here is one version and it coincides with other versions.
Even before Barack Obama was inaugurated as president on 20 January 2009 the talk boards of several websites frequented by conservative voters were already humming with angry conversations about the global economic meltdown. Why were the banks being bailed out, correspondents wanted to know, why were billions of their tax money being spent on government programmes, what would happen to their children saddled by public debt?
One website that proved to be key in the inception was Market Ticker, an investment site run from Florida by Karl Denninger. “I saw everybody fawning over Obama with the inauguration and yet here he was appointing people like Larry Summer and Tim Geithner to his team who were all part of creating the problem,” he said.
Stephanie Jasky, a paralegal from Detroit, Michigan, was one of the angry voices that took part in the Market Ticker chats. She and her husband had a business fixing up and selling houses, and they were hit when the housing market collapsed.
“We were haemorrhaging money. I was looking for answers – I wanted to know what had happened. The more I looked the more it became clear to me that the problem was our government, that the government had become the criminal.”
The chat boards started to fill with calls to protest. But what was the best way to express anger?
Somebody on Market Ticker suggested posting tea bags to their elected representatives in Congress as a form of protest. Jasky immediately leapt on the idea.
“All these bailouts and stimulus packages, that was taking our money and spending it without our permission. Taxation without representation. We thought, didn’t that happen to us in the Revolutionary wars? Hello! Anyone remember King George?”
Jasky bought an economy box of tea bags and posted one to every member of Congress. Other people did too. The practice spread so much so that by the time that CNBC reporter Rick Santelli made his famous rant on 19 February 2009, he did so standing in front of Chicago traders who all had tea bags stuck to their computer screens and phone banks.
Should the tea party movement prove a lasting phenomenon, the Santelli rant will go down in history as one of its main birth pangs. While broadcasting from the floor of the Chicago Mercantile Exchange he accused the Obama administration of “promoting bad behaviour” and subsidising “losers’ mortgages”. His criticisms evoked a huge cheer from the traders behind him, particularly when he said: “We’re thinking of having a Chicago tea party in July, I’m thinking of organising it.”
The two-minute diatribe quickly went global. It was grabbed by Conservative campaigns such as FreedomWorks and aggressively promoted.
Angry voters began to respond to Santelli’s call and set up their own tea party groups linked loosely through the internet. It all happened with tremendous speed. Within 10 days of the rant, on 27 February, the first Tea Party rally was held in Washington, Chicago and other cities across the US.
The tea party phenomenon had been born.
Gee CoRev, who started those bail outs for TBTF and investment firms?
I don’t understand a word that CoRev is saying, and I’m a senior. The ACA has had zero effect on me. (I’m on Medicare.) The “death panels” were a lie – there are no such things. The reason that the ACA was “partisan legislation” was 100% the fault of the Republicans. It is basically Heritage-Plan/Romneycare. Most of its faults are due to that heritage (pun somewhat intended). Single-payer public insurance would have been a lot less cumbersome but would have eliminated some big insurance companies. In an extreme effort to be accommodating to Republicans the Democrats eliminated that even as an option, only to have people like CoRev blame partisanship on them. As i see it, the Republicans have been trying to drive us into the ditch, and the Democrats have compromised with them by driving half on the shoulder.
Run, I didn’t say started I said fostered the Tea Party movement.
Foster — “to promote the growth or development of; further; encourage:” A better term may have been focused the movement.
Run and JimV, EM et al no one has supported Dan’s contention.
Again, shape shifting CoRev. Fostered, started, etc; the tea party’s moment in history resulted from issues other than the PPACA and the 2007/2008 crash was well before the PPACA. The PPACA was an add on to the crash. We answer the question and you shift the discuss. Now it is no one is agreeing with Dan’s contention. What is next so you no longer have to support your contention. Stick to the topic.
Dan’s contention is certainly true, but limited. Not a whole lot of seniors lives would be changed if they were getting an extra couple per cent of interest.
On the other hand, the obvious truth is that, like climate science, you ignore facts, use sound bites(the whole Gruber thing) and create an ACA strawman as a reason seniors voted Rep in this past election. Of course that is silly, as the Rep party has made crystal clear their intention to totally change SS and Medicare. They have been against these programs since they were instituted, and they are against them now.
The amazing part is how seniors ignore the actions and intentions of Reps because Obama is black. Come out here to the Valley of the Sun and I can show you hundreds of sweet old ladies showing their racist skirts.
EM, always the rant without little to any support. You first supported my contention: “Not a whole lot of seniors lives would be changed if they were getting an extra couple per cent of interest”. Gruber for ACA, as in Climategate for climate, will be catalysts used for years to point out the hypocrisies of the movements.
Where do you get the Reps want ot destroy SS and Medicare? The only places I see this I on liberal political blogs. There’s a great deal of difference in proposing changes and improvements to them compared to destroying them.
What I see is a circling of the wagons around especially SS to protect it from any improvement proposed by reps. The motivation appears to keep the political credits coming only to Dems. Even those credits are diminishing as SS and Medicare are the laws of the land, and fully accepted as such. The only way to continue to squeeze political credit is to make false claims of reps ….
This statement by you: Where do you get the Reps want ot destroy SS and Medicare?” does not equate to what EM said: “as the Rep party has made crystal clear their intention to totally change SS and Medicare.”
You keep changing the argument to suit your needs. You are shape shifting the intent of the argument.
“Where do you get the Reps want to destroy SS and Medicare?”
I would suggest you read the budgets written by Ryan and passed by the GOP house. Of course, I mentioned that before.
A thought just struck me. Isn’t it strange that the people that supported(and made a real force out of) the Tea Party are the same ones who spend a ton of cash on climate denial, ?
“The House Budget Resolution for Fiscal Year 2015, H. Con. Res. 96, introduced by Budget Committee Chairman Paul Ryan (R-WI), was passed by the House of Representatives on April 10, 2014. It would end traditional Medicare, make it harder for seniors to choose their own doctors, and increase health care costs for both current and future retirees. The House Republican budget ends traditional Medicare and achieves savings for the federal government by shifting costs to Medicare beneficiaries.
Privatizing Medicare with Vouchers/Premium Support Payments
Beginning in 2024, when people become eligible for Medicare they would not enroll in the current traditional Medicare program which provides guaranteed benefits. Rather they would receive a voucher, also referred to as a premium support payment, to be used to purchase private health insurance or traditional Medicare through a Medicare Exchange. The amount of the voucher would be determined each year when private health insurance plans and traditional Medicare participate in a competitive bidding process. Seniors choosing a plan costing more than the average amount determined through competitive bidding would be required to pay the difference between the voucher and the plan’s premium. In some geographic areas, traditional Medicare could be more expensive. This would make it harder for seniors, particularly lower-income beneficiaries, to choose their own doctors if their only affordable options are private plans that have limited provider networks.
The Ryan budget proposal calls for private plans to provide benefits that are at least actuarially equivalent to the benefit package provided by fee-for-service Medicare. This gives private companies the ability to tailor their plans to attract the youngest and healthiest seniors, even if payments are “risk adjusted” to take health status into account, which would leave traditional Medicare with older and sicker beneficiaries. Their higher health costs would lead to higher premiums that people would be unable or unwilling to pay, resulting in a death spiral for traditional Medicare. This would adversely impact people age 55 and older, including people currently enrolled in traditional Medicare, despite Chairman Ryan’s assertion that nothing will change for them.
The Ryan proposal establishes accounts for low-income Medicare beneficiaries, such as those people dually eligible for Medicare and Medicaid, to use to pay premiums, co-pays and other out-of-pocket costs. However, it is unclear what the amount of assistance would be or if it would adequately cover out-of-pocket expenses.
Raising Medicare’s Eligibility Age/Increasing Out-of-Pocket Costs
In addition to privatizing Medicare, the Ryan budget would increase the age of eligibility for Medicare from 65 to 67 by increasing it two months per year from 2024 to 2035. Raising the Medicare eligibility age is a benefit cut. Although this proposal would save money for the federal government, it would increase system-wide health spending by increasing costs for everyone else – 65 and 66 years olds who would have to buy private insurance, which can be age rated; younger people buying health insurance coverage in an older risk pool; Medicare beneficiaries left in an older and less-healthy risk pool; employers providing health insurance to workers and retirees and State Medicaid programs.
The Ryan budget plan would also redesign the Medicare benefit beginning in 2024 by combining the Part A and Part B deductibles and making changes to supplemental insurance (Medigap) policies, changes that would likely increase costs for people with Medigap policies. Medicare could be improved for beneficiaries by simplifying its cost-sharing and adding a catastrophic cap. However, the National Committee is opposed to proposals to restructure Medicare’s benefits that would reduce federal spending by requiring beneficiaries to pay more.
We also oppose a proposal in the Ryan budget plan to expand income-related premiums under Medicare Parts B and D until 25 percent of beneficiaries are subject to these premiums. A Kaiser Family Foundation study found that this proposal would affect individuals with incomes equivalent to $45,600 for an individual and $91,300 for a couple today.
Repealing the Affordable Care Act
The Ryan budget also calls for repealing provisions in the Affordable Care Act (ACA), which would make insurance available and more affordable for 65 and 66 year olds if they lost Medicare coverage. Without the guarantees in the ACA, such as requiring insurance companies to cover people with pre-existing medical conditions and to limit age rating, it would be very difficult and expensive for older people to purchase private insurance.
Repealing the ACA would also take away improvements already in place for Medicare beneficiaries – closing the Medicare Part D coverage gap, known as the “donut hole;” providing preventive screenings and services without out-of-pocket costs; and providing annual wellness exams. The Centers for Medicare and Medicaid Services recently reported that since the passage of the ACA, over 7.9 million Medicare beneficiaries in the Medicare Part D donut hole have saved $9.9 billion on their prescription drugs, an average of $1,265 per person. Also, 37.2 million people with Medicare took advantage of at least one preventive service with no cost sharing, including an estimated 26.5 million people with traditional Medicare, and more than 4 million who took advantage of the Annual Wellness Visit. ”
Jim V. Well said. I am with you. CoRev I certainly do not want to be a burden on my children, I want to live independently as long as I can and I do not want to run out of money before my wife and I die so for the life of me I can not understand why I would ever vote for a GOP candidate when they want to take away social security (which I will depend on to live a comfortable and independent life style and not move in with my kids) and Medicare (which I will depend on to keep my health care costs manageable until I have a need to draw on our long term care insurance. And I certainly care about my kids’ wellbeing which is why GOP austerity is so horrible–not for me but for the young people who are un or underemployed and always underpaid as a result.
EM your comment reinforces my wagon circling position. Any organization whose role it is to protect SS & medicare from any change at all costs is not objective. The article is pure speculation of the potential effects of legislation only proposed and passed in one house. Betcha his review was different as was OMB’s.
Terry, well being and austerity are not mutually exclusive. To what specific legislation are you objecting? How much deeper do you want your children’s future mortgaged to support a government is always best solution.
Here is the thing CoRev. If more people worked more hours at higher wages they would pay more taxes and receive less government benefits whether it is health insurance subsidies under the ACA, unemployment insurance, food stamps, Medicaid etc. The three biggest contributors to the ballooning national debt since 2000 were the Bush tax cuts–now partly undone, 2 major wars at least one of which was a war of choice and the economic recessions of 2000 and 2008. If the government–at all levels borrowed more money at very favorable interest rates and rebuilt the in many cases collapsing infrastructure not only would more jobs be created with more taxes paid but we would be prepared to be more competitive going forward because companies could get their goods to market and local governments would not in the future have to raise even more in taxes to make emergency repairs. That is only one example. A second would be to make investments in post high school education fully deductible from taxes whether it is mom and dad sending junior to college or a tech school graduate struggling to pay off a student loan. We let Business depreciate (or expense) investments in capital goods and research and development, why shouldn’t labor get the same break? The point is that capital does not want labor to succeed in this country and the GOP has relied on austerity to deep six every fiscal effort to get the economy growing because that would exert upward pressure on wages and the capitalists do not want that. Just ask the Pope–and he is a senior citizen too.
Is that all you have, class warfare?
Yep. Until something happens it is always speculation. Fortunately for the human race there are people who can add.
After reading this entire exchange, I’ve learned that CoRev would have flunked (presuming) his high school debate class.
Tackle head-on the subject being debated and quite shifting your topic to something else! Jesus!
This whole comments section went from a comment on political leanings of seniors, to interest rates (on CD’s for presumably ‘seniors’), to the launching of the “Tea Party Movement” to the PPACA!!
I get they are in some fashion ‘linked’ yet continuing to try and debate someone who insists on topic-shifting will only make you do/write something that only feeds the troll!
And now you have my comment here at the end adding nothing to the conversation so this is my position:
Interest rates are not a factor in how seniors vote. Seniors who have interest-bearing assets make up a small portion of the voting population and even then, their percentage of assets whose returns are associated with the Fed Rate is statistically insignificant to their overall returns.
Surprisingly, I find it interesting so many who would be considered “republican” are clamoring for higher rates when the companies they run/operate can borrow so cheaply for so long and have taken significant advantage of the tax breaks associated with said borrowing.
Yet they’re not expanding production capacity with this borrowing – merely returning capital to investors/shareholders.