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

The Young, the Shutdown, Austerity, and Wealth

I can not help but wonder if Friedman takes delight in the predicament of the Young and Baby Boomers as he writes about Druckenmiller excursions on to college campuses . I envision  a bit of Schadenfreude as evidenced by his choice of titles for his latest column. October 15, 2013, Tom Friedman writes in the NYT about the young being screwed by the baby boomer generation and trumpets  for rebellion against the kicking of the can down the road of higher costs and taxes due to Social Security, Medicare, Medicaid, and entitlements. Tom Friedman’s NYT article “Sorry Kids, We Ate It All” masks the real threat to student and their productivity going into the future.

“as our politicians run for the hills the minute someone accuses them of ‘fixing the deficit on the backs of the elderly’ or creating ‘death panels’ to sensibly allocate end-of-life health care. Could this time be different? Short of an economic meltdown, there is only one thing that might produce meaningful change: a mass movement for tax, spending and entitlement reform led by the cohort that is the least organized but will be the most affected if we don’t think long term — today’s young people.” “Sorry Kids, We Ate It All”

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Damon Silvers Smackdown of CNBCs Kelly Evans and Simon Hobbs on Social Security

Damon Silvers appears to have his wheels on correctly answering two CNN talking heads on their version of Social Security.

Kelly Evans: “Of course people want to make sure that our citizens are taken care of. But that’s almost not the point.” (It’s not?) Evans proceeds to assail Silvers and the AFL-CIO for refusing to “negotiate” over seniors’ well-being.”

Simon Hobbs: “Are you as clear on the reality that if you don’t cut entitlement benefits this country may well go bankrupt.”

Damon Silvers answers: “‘That’s frankly not true,’ he says. ‘That’s a lie put forward by billionaires who don’t want to pay higher taxes. The only people who believe what you just said,’ he added, ‘are people who are worried that their very large incomes will be taxed.'”

Damon Silvers promises: “We’re not embarrassed about that whatsoever,” he replies. “If you cut Social Security benefits or Medicare benefits to our seniors, to our most vulnerable people in the country, you are going to get no support on it.”

It is time for people to hold Democrats feet to the fire in a similar manner that Teabaggers held their representatives accountable.

Hat Tip to Crooks and Liars

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Health Wonk Review – Rich and Varied Offerings

Maggie Mahar reviews other blogs on healthcare within the blogosphere

 

Joe Paduda has hosted the newest edition of Health Wonk Review, a bi-weekly roundup of some of the best healthcare posts in the blogosphere. You will find it at Joe’s blog, Managed Care Matters.:

Here are just a few highlights:

  • Over at HealthBusinessBlog David E Williams responds to a relative’s question : Why are Obamacare’s opponents so vehement?The bottom line, says David, is that “some opponents have whipped themselves into a lather over their revulsion to all things Obama and are living in an echo chamber where these views seem rational. It would be better for everyone if they went back to the Birther madness.”

    I agree. This is not about healthcare, and it is not about money. The Congressional Budget Office has told us that the ACA will not add to the deficit.. As David points out many of the ideas in the Affordable Care Act were originally Republican ideas. It is not a radical plan for health care reform; it is a moderate plan. And Obama himself is a moderate. Why then do they hate him with such a passion? I’ll leave it to you to answer that question.

  • In a post titledWe’re all in this together” Louise Norris confides that under the Affordable Care Act, her family’s insurance premiums will rise sharply. (They had a high deductible plan with low premiums. The ACA outlaws such high deductibles because in too many cases, insurers sell them to low-income and lower-middle income families who then cannot afford to use them. So they put off getting healthcare until they are very, very sick.)Meanwhile, Louise and her husband earn too much to qualify for premiums. But they’re not angry. “We support [reform]” she explains, “because something like this isn’t supposed to be all about us. In the case of healthcare reform, our higher premiums will help ensure that our friends and neighbors and fellow citizens have access to affordable health insurance.” Joe writes: “Thanks for the reminder, Louise!” I agree wholeheartedly. (btw Louise is a health insurance broker.)

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IMF Says Tax the Rich to Make Up the Deficits and Fight Income Inequity

Recent article by AFP cites an IMF report suggesting that countries fighting deficit spending should simply “Tax the Rich” in income more.

in its Fiscal Monitor report, subtitled “Taxing Times”, the Fund advanced the idea of taxing the highest-income people and their assets to reinforce the legitimacy of spending cuts and fight against growing income inequalities.

“Scope seems to exist in many advanced economies to raise more revenue from the top of the income distribution,” the IMF wrote, noting “steep cuts” in top rates since the early 1980s.

According to IMF estimates, taxing the rich even at the same rates during the 1980s would reap fiscal revenues equal to 0.25 percent of economic output in the developed countries.

“The gain could in some cases, such as that of the United States, be more significant,” around 1.5 percent of gross domestic product, said the IMF report, which also singled out deficient taxation of multinational companies.

In the US alone, legal loopholes deprive the Treasury of roughly $60 billion in receipts, the global lender said.

Hat Tip to Crooks and Liars

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Breast Cancer: Catching Up With Amy Berman, a Woman Who Chose Life Over Longevity

On Breast Cancer and the chose of life over longevity, Maggie Mahar; The Healthbeat  Blog Life Over Longevity

HealthBeat readers may remember the two-part post that I wrote about Amy Berman back in October of 2011.

Part 1 began: “When Amy Berman was diagnosed with Stage IV breast cancer a year ago, she made a courageous choice. Instead of fleeing death, she decided to pursue life. Rejecting chemotherapy, radiation and surgery, she chose palliative care instead.” 1/

Our War on Cancer

Berman knew that her stage IV cancer could not be cured. As a nurse, she also knew what women who undergo aggressive treatment endure—and that, despite that treatment, many will never escape the disease.

As Clifton Leaf points out in his new book The Truth in Small Doses, when people talk about the strides that we have has made in our War On Cancer, they greatly exaggerate our success. When it comes to breast cancer, for example, 30 years after we launched the way, the number of women per 100,000 who die of breast cancer had actually grown from 28.4 per 100,000 in 1970 to 29.2 per 100,000 in 2000.

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Fair Market Valuation; CBO, Student Loans, Food Stamps, Etc.

Earlier in 2013, CBO’s Douglas Elmendorf’s forecasted return on Student Loan’s resulting in a positive return for the Government. Later Elmendorf reversed the forecast claiming student loans would cost the government and the taxpayers by generating a negative return. Using one cost model (FCRA) to estimate the return, the government will make $184 billion on student loans in the next 10 years. Using another cost model (Fair Market Valuation ) to estimate return, the government will lose $95 billion over the same period. So why the difference? Utilizing the Fair Market Valuation methodology would necessitate additional compensation for investors to accept the risk that losses may exceed those already reflected in the cash flows. A premium for the possibility that debtors will default in large numbers is added into the calculation. Wait a minute, these are students locked in by signature to these loans which can not be discharged through bankruptcy. So why?

I happened upon a New America Foundation article by a former senior analyst in the Republican staff of the U.S. Senate Budget Committee Jason Delisle, who proclaims much the same as the CBO’s Douglas Elmendorf positing the Fair Market Valuation methodology being a fairer and more accurate way to assign risk to student loans. Beneath Jason’s article and within the comments section associated with the article by Jason were comments by Alan Collinge of the Student Loan Justice Org disputing Jason’s assumptions on Fair Market Valuation (The New America Foundation agreed to a discussion with Alan and reneged. Alan has gone unanswered by Jason and The New America Foundation).  Alan’s argument is the Fair Market Valuation methodology uses the less abundant commercial data to evaluate the return on student loans as opposed to the more readily available and abundant Department of Education student loan data (which has been used in the past by the CBO). The difference between the two databases is the Fair Market Valuation uses commercial loan data reflecting riskier loans than what occurs from the Federal Direct Loans program. While there exists a level of default within the student loan program administered by the Federal Direct Loans program; remember too, Federal Direct Loans can not be discharged through bankruptcy proceedings. Additionally, the collection percentage on Federal Direct Loans is much higher than commercial credit collections which can be disposed of via bankruptcy proceedings. Griffith and Caperton of the Center for American Progress add to the criticism of using Fair Market Valuation stating government loans of all types has cost taxpayers 94 cents for every $100 loaned over the last 20 years. While the FHA took a huge hit when Wall Street crashed, it still performed better than the commercial counterparts. Government programs appear to be on pretty stable ground in their projections yet The New America Foundation and the CBO arbitrarily claim otherwise. Reviewing the history of government lending over the last 20 years shows it has overestimated the total costs to government by $3 billion. For those who may not know, Federal Student loans are like a Roach Motel, checking in by loan signature is near to impossible to negate or check out except to die, become disabled, or pay it off . . . a bankers dream. CBO’s Douglas Elmendorf is showing a partisan preference for the Fair Market Valuation of Student Loan which in the end favors commercial interests over students and the Direct Loan program.

Most recently, another supporter of the Fair Market Valuation methodology of loans, Jason Richwine formerly of the Heritage Foundation and the AEI, wrote an article at the National Review on Farm Subsidies. Myself, I am not a big fan of farm subsidies; but if it comes to eating, I would prefer my food to be homegrown rather than controlled by an out-of-country food cartel the way oil is today. ~ 50% of the US food base is imported today, so why more? There is a need to control subsidies to food manufacturing farms which differ from the family farms as many know them; but to throw the baby out with the wash, I am not sure is necessary. The SNAP program has been heavily contested in Congress with the Repubs looking to balance the budget on the back of the poor. One comment by Jason Richwine within his Farm Subsidy article challenges the ~$4.50/day food stamp recipients get daily and its correlation to health:

“Henry Olsen criticized House Republicans for seeking to cut food stamps but not crop-insurance subsidies in the recently passed ‘farm bill.’ Point taken. But personally I think he is being too hard on conservative activists. To say that cutting the food-stamp budget by a small percentage is ‘the taking of food from the mouths of the genuinely hungry’ and will ‘cut back on your dinner’ is a bit overblown. In fact, I would guess that a randomized controlled study, were it done, would show that food stamp recipients are no healthier than non-food stamp recipients in the long run.”

Well Jason Richwine is correct on one thing, the Food Stamp recipients would be no healthier than the poor non Food Stamp recipients not on SNAP. Consider the SNAP ~$4.50/ day could not buy a one time saltier and higher fat content Quarter pounder meal (soda + fries) at McDonalds. So why quibble over 5 or 10 cents? The true issue is ~$4.50 per day does not go far in many sections of town or in the suburbs and at the store as it now stands. If health is truly the issue here, maybe the program should be expanded to include others and increased in daily dollars? Health is not so much the issue as being hungry or hungrier and then being expected to work while hungry in order to gain the Food Stamps as expected by many states. Or perhaps they can eat cake?

Jason Richwine claims the Fair Market Valuation methodology (based upon commercial data) will give a more accurate picture for the farm subsidies which he also asserts are also less risky than the Food Stamp and the Student Loan Programs. Jason may have a point here since the economic growth of recent has been driven by wild swings on Wall Street and Repubs always look to the poor to make up the difference. I would want to look to past projects to determine what the historical difference has been before making radical changes resulting in phantom deficits. This seems to have been throw to the side with the push to use Fair Market Valuation for relatively stable programs with good returns.  The Food Stamp program is but one area for Fair Market Valuation to come from Jason Richwine.

“Right now, the cost of almost every government credit or insurance program – from crop insurance, to student loans, to public pensions – is underestimated. The movement for ‘fair value’ accounting is intended to fix that problem.”

What Alan Collinge points out does makes sense. Jasons Delisle and Richwine and CBO Director Douglas Elmendorf scrapped decades of data on student loans and other programs which show a return even after historical cost. In place they assume higher risk as taken from commercial loan data, a riskier environment which is not reflective of degree of risk within these programs. We are not talking MBS or CDOs here and the end game are students locked into these loans whether they default or not. The long arm of the government extends much further for students than it does for AIG, Lehman, or Goldman’s Executives to the extent it will garnish Social Security or Disability benefits and future wages. The risk of default Delisle and Richwine, which is so prevalent in commercial loans, is mitigated substantially in Student Loans.  The wild swing seen in the CBO’s projection of Student Loan Return was caused by using the riskier data of FMV and assuming the interest rate charged no longer covers the cost of the Student Loan program. Commercial Investors would demand a higher interest rate to cover losses in case Wall Street blows up the economy again or risk as taken from commercial data (Fair Market Value) rather than the historical data (FRCA) of the US Department of Education. In the end, this will drive interest rates higher for student loans and other loan programs to cover projected potential phantom deficits or costs. This makes sense on Wall Street and for TBTF who failed to mark down investments when they defaulted; but, it does not make much sense for student loan borrowers who are locked into it. there are other things to consider.

An Invitation to Jason Delisle of The New America Foundation by email on September 25, 2013:

from: run75441 aka Bill H
To: delisle@newamerica.net

Good morning Jason:

I write on Angry Bear Blog and I have also helped many soon-to-be college students apply for grants and loans.

I have been reading and watching the discussion going back and forth on Fair Market Valuation of student loans and the resulting change in return as projected by Douglas Elmendorf’s CBO. This change in valuation establishes a basis for a dramatic change in how student loans rates are calculated for risk and return which in most cases does not exist in the same manner as what exists for commercial loans when using commercial loan data. There is no bankruptcy for student loans which would mitigate the risk factor and is also reflected by the collection rate as opposed to lets say credit cards?

Allan Collinge has rasied several points challenging Douglas Elmendorf and your conclusions on the utilization of Fair Market Valuation in determining the return on student loans. Reviewing all of the posts, I have not come across a response to Allan’s points arise from The New America Foundation. His points go unchallenged and I would offer you an opportunity to respond in dilogue to Allan on Angry Bear Blog in your own and unaltered words. Is this a possibility?

Please let me know. Thank you for your time and consideration.

Regards,

Bill

 

1. Deseret News; August 14, 2013 “Making a Killing or Getting Fleeced?”

2. The New America Foundation; March 23, 2012, “Fair Values Accounting Shows Switch to Guaranteed Student Loans Costs $102 Billion”

3.  Student Loan Justice Org

4. Forbes, July 11, 2013 “Interview with Student Loan Activist Alan Collinge – Fair Value In An Unfair System?”

5. The Center for American Progress, May 2012 , “Managing Taxpayer Risk”

6  National Review, September 23, 2013;  “Farm Subsidies, Even Worst Than You Think”

7. The Center for American Progress, April 26, 2006,  “Understanding Mobility in America

8. The Heritage Foundation; May, 2012 “The Real Cost of Pensions”

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Why Do People Prefer the Affordable Care Act Over Obamacare?

Affordable Care act versus Obamacare Act

I will give you, there is nothing within this bill that is easy to understand. Along with Maggie Mahar and others, I took the time to read the act and attempt to understand it which even today causes me fits. As shown in this clip, many people can distinguish between the words Affordable Care Act and Obamacare; but they fail to distinquish the content and understand they are the same. Kudos to the propagandist to associate a black President with a particular Law. There should be a Goebbels award somewhere for this type of achievement in skewing  the true intent of an act to just a person’s name. Would it sell better if we called it the Boehner Act or McConnell Act? People are acting against the interests of the whole and their own self interests because of a name. When you get right down to it and you know a large percentage of people within the wealthiest and richest in income nation in the world go without healthcare, why would you object to a plan to provide it because of the name even if it was not single payer, Medicare for all, or Universal etc.?

Maybe we should change the Link to Affordable Care Act to Black Man Care Act? Perhaps then, we might understand the true beliefs of a Congress who would shut down a government and people who might pick one over the other without knowing they are both the same. Hat Tip to Digsby for providing the clip.

The words are solely mine.

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Chris Hayes Explains the PPACA for Fox and Friends

Obama Care for Fox News and Friends

 

Not that they have any interest in reality at the moment. The Republicans have worked themselves into a frenzy that resembles the adolescent girls who accused the Salem townspeople of witchcraft at this point. This is how they look:

 

Maybe it is time to take away the beer? Hat Tip to Digsby

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October 1st, A New Republican Proposal, and the Bad News Bears

October 1st, the country and government will once again be held captive by minority political interests seeking to force their will upon a country which did not endorse them or their beliefs in the last election. Radical House Republicans have come back with another proposal which seeks to delay the PPACA for one year, removes the medical device taxation to appease the healthcare industry, and adds Huelskamp’s “conscience clause” to the amendment limiting the coverage of preventative birth control. Funding for the military was included in the latest amendment. This is a radical change from John Boehner’s efforts to concentrate on setting a new Debt Ceiling rather than funding the PPACA. The Republican’s actions strip those of healthcare coverage who can least afford it. Much of what is proposed by the Republicans lends credence to Independent Senator Bernie Sander’s speech “Lone Star Strategy.”

Republicans’ efforts to cut food stamps and defund the Affordable Care Act are just “the beginning of the game,” Senator Bernie Sanders said.

“All of these issues are related to something that is much, much larger and that is the transformation of American society in a radically different way than it is today,” Sanders said. “And what my Republican colleagues, almost without exception, want to do now is take us back to the 1920s where working people had virtually no protection on the job at all.”

In the midst of all of this, the Federal Government is releasing preliminary information on PPACA subsidies and coverage by states.

Obamacare and The Bad News Bears; Maggie Mahar; Health Insurance Org.

Why is the mainstream media downplaying the good news about affordable insurance rates in the state health insurance exchanges?

Yesterday, when I read the new HHS report on premiums in the individual exchanges in 36 states, I was impressed by the good news. In the marketplaces where people who do not have access to employer-sponsored insurance will be purchasing their own coverage, rates will be much lower than expected. This is true even in Red States that have resisted Obamacare. For instance in Houston, Texas, a 27-year-old earning $25,000 would pay $81 monthly for the least expensive Bronze plan – after using his government subsidy – while a family of four with income of $50,000 would owe just $52. What we are seeing is “reverse sticker shock.”

Then I began to read what the press had to say about the report, and found myself frustrated by the misleading, fear-mongering response. It sometimes seems as if the mainstream media is bent on downplaying any good news about reform.

Was it wrong for HHS to focus on costs?

Even the New York Times – a highly-respected publication that is often viewed as “liberal” – took a dour view, warning that “the data” in the HHS report on premiums “provides only a partial picture of the reality that consumers will face  … The figures, almost by definition, provide a favorable view of costs, highlighting the least expensive coverage in each state.”

What Times reporter Robert Pear overlooks is the fact that the vast majority of individuals shopping in the exchanges live in middle-income or low-income households. (More affluent Americans tend to have access to comprehensive insurance through their employer, a spouse or their parents.)

What folks purchasing their own coverage in the state marketplaces want to know is what the least expensive Bronze and Silver Plans will cost. Those are the plans they will be buying, and that is why the HHS report focuses on those policies.

Ignoring ACA’s subsidies

Pear goes on to stress how much premiums will vary – even within a given state – and how high they will be in some cities: “… a 40-year-old buying the least expensive silver plan would pay $240 a month in Los Angeles, but $330 in Sacramento, about 38 percent more.”

True. But Pear doesn’t take into account the fact that most Americans shopping in the exchanges will be eligible for government subsidies. They won’t be paying $240 or $330 a month. Thanks to the government help, some 60-year-olds will have to pay nothing for insurance.

Indeed, after applying his subsidy, a 40-year-old living on $22,980 in either Los Angeles or Sacramento would pay only $120.65 a month for coverage. This is because the lawmakers who wrote the Affordable Care Act believed that someone earning $22,908 should not be expected to spend more than 6.3 percent of his income on insurance. As the table in this post shows, the IRS will calculate tax credits to make up the difference between the percentage of income that someone is expected to contribute and the “sticker price” on a Silver plan.

Forbes columnist Avik Roy also ignores subsidies when writing about the HHS report. This allows him to claim that the newly announced rates will force individuals buying their own coverage to shell out 99 percent more than they are paying today.

Moreover, when Roy compares today’s rates to the premiums that individuals purchasing their own insurance will pay next year, he overlooks the fact that many of the plans now sold in the individual market are “bare-bones” plans. Most don’t cover maternity benefits. Some don’t pay for chemotherapy. Many carry huge deductibles. When he compares the policies that will be sold in the exchanges to these plans, Roy is not making an apples-to-apples comparison. He is comparing apples to rotten apples.

Narrow networks

Meanwhile, Pear appeals to his readers’ worst fears by cautioning that, according to “consumer advocates … people shopping for health insurance should consider not only price, but also other factors like the list of covered drugs and the doctors and hospitals available in a health plan.”

Not long ago, the Times reported on the dangers of insurance plans with “narrow networks” that may not cover the doctors and hospitals that a patient knows best. The truth is that most of the currently uninsured and underinsured Americans who will be shopping in the Exchanges don’t have a list of favorite specialists. Many don’t have a doctor; when they receive care, they are treated in an ER or a community clinic.

Polls also show that the young Americans who will be flooding the exchanges are three times as likely to be willing to give up their choice of doctor for a lower premium.

Insurers are holding down premiums by excluding marquee healthcare providers who charge more than others for the even the simplest procedures. The Times has suggested that, in “narrow networks,” patients with “complex conditions” may not be able to get the care they need.

In fact, the Obama administration addressed that problem last year, issuing a “rule” that ensures that networks will not be too narrow. In order to win state and federal approval insurers will have to show that their network includes “a sufficient number and type of providers.”

Meanwhile, study after study shows that there is little correlation between what a health care provider charges an insurer and the quality of care provided. Pricing is all about market clout. Some hospitals charge more “because they can.”

But Americans can no longer to afford to pay exorbitant prices for brand healthcare. HMOs that charge less if the patient stays “in network” fell out of favor in the 1990s, but today they’ve become increasingly popular. Indeed when Consumer Reports ranks insurers, HMOs that rely on a network of providers to coordinate patient care receive the highest rates both for quality of care and consumer satisfaction. Networks represent the future of American medicine – and not just in the exchanges.

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Senator Sanders on the The Transformation of American Society

This is an 11 minute clip of his speech, “The Lone Star Strategy.” It is worth a listen.

The Lone Star Strategy

Senator Bernie Sanders

Republicans’ efforts to cut food stamps and defund the Affordable Care Act are just “the beginning of the game,” Sanders said.

“All of these issues are related to something that is much, much larger and that is the transformation of American society in a radically different way than it is today,” Sanders said. “And what my Republican colleagues, almost without exception, want to do now is take us back to the 1920s where working people had virtually no protection on the job at all.”

I listened to Senator Ted Cruz who looks and sounds a lot like Bill Murray (sorry Bill) in “Meat Balls or Stripes”  .  .  .  fun to listen to and get a laugh ; but who takes him seriously? He needs to go home to Texas and watch the corn grow.

 

More from Senator Bernie Sanders on CSpan:

 

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