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

National Security at Any Cost

We do have Fourth Amendment Rights. Fourth Amendment Rights are for everyone: Tea Partiers, Republicans, Democrats, Independents…. The Obama administration is moving us step by step towards a totalitarian regime, where the interests of the few over-ride the democracy of the many. Read the Fourth Amendment carefully:

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, or the things to be seized.

Those who plead National Security at all costs are no different and no less dangerous that Joseph McCarthy. He, too, pleaded National Security, as he destroyed countless lives and reputations. Nor are those who plead National Security at all costs any different from J. Edgar Hoover who spied on Martin Luther King in the name of National Security.

Do you really think that the kind of free hand the NSA is asking will protect us from the likes of McCarthy and J. Edgar Hoover? I do not think so.

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Round and around the revolving door does spin…

Lifted from comments from open thread July 23 by reader Jack

Round and around the revolving door does spin. Those who take the ride are 
guaranteed to win, in the game of securities enforcement law. In yet another 
move between public and private practice John Khuzami moves from the SEC to “….a 
job that pays more than $5 million a year at Kirkland & Ellis, one of the 
nation’s biggest corporate law firms. In doing so, he is following the 
quintessential Washington script: an influential government insider becoming a 
paid advocate for industries he once policed.” NY Times, July 23, 2013. 
http://dealbook.nytimes.com/2013/07/22/a-legal-bane-of-wall-street-switches-sides/?hpw

Quote:
    
    “We started out knowing that everybody and anybody wanted him,” said Mark 
Filip, who leads Kirkland’s government and regulatory defense group.”
    Mr. Khuzami’s skills were so sought after that “…Visa and Bridgewater, the 
giant hedge fund, were among the companies that approached Mr. Khuzami for 
in-house counsel jobs. The fervor grew so great that Fox Business declared it 
the “biggest bidding war on Wall Street.”

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Say it like it is?

Via the Washington Post comes some interesting language.

Employers are raising education requirements even for entry-level positions.

Thirty-two percent of hiring managers and human resource professionals said they are hiring more employees with college degrees for positions that were historically held by high school graduates, according to a survey by CareerBuilder.

“While some of this may be attributed to a competitive job market that lends itself to college grads taking lower skill jobs, it also speaks to companies raising performance expectations for roles within their firms to enhance overall productivity, product quality and sales,” said Brent Rasmussen, president of CareerBuilder North America.

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Hunger Games USA

Paul Krugman writes in Hunger Games USA. Facts and figures at his column.

To fully appreciate what just went down, listen to the rhetoric conservatives often use to justify eliminating safety-net programs. It goes something like this: “You’re personally free to help the poor. But the government has no right to take people’s money” — frequently, at this point, they add the words “at the point of a gun” — “and force them to give it to the poor.”

It is, however, apparently perfectly O.K. to take people’s money at the point of a gun and force them to give it to agribusinesses and the wealthy.

Now, some enemies of food stamps don’t quote libertarian philosophy; they quote the Bible instead. Representative Stephen Fincher of Tennessee, for example, cited the New Testament: “The one who is unwilling to work shall not eat.” Sure enough, it turns out that Mr. Fincher has personally received millions in farm subsidies.

Given this awesome double standard — I don’t think the word “hypocrisy” does it justice — it seems almost anti-climactic to talk about facts and figures. But I guess we must.

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McDonalds’ Suggests a Budget for Employees . . .

Partnering with Visa, McDonalds’ Suggests a Budget for Employees which Ironically Shows in the End Just How Impossible It is to Get by on the Minimum Wage. The budget does not include gasoline, food, or heating expenses and incorporates $20/month for Healthcare Insurance.

Screen-shot-2013-07-15-at-9_29_08-AM

Besides skipping certain expenses and skimping on others; to meet the income levels portrayed in the budget, McDonalds suggests associates to work not one but two jobs. A full time job at McDonalds and a part time job elsewhere totally 62 hours per week (if the worker resides in Illinois where the minimum wage is $8.25/hour). If perchance, the worker resides in one of the other 48 states; the total hours needed to hit the suggested income level jumps to 74 hours/week due to a lower minimum wage (the equivalent of a second full time job). The same as Wal-Mart employees, McDonalds associates will end up seeking public aid to get by because of low wages.

If you recall Spencer’s post of Labor’s Share; Spencer pointed out how Productivity Gains have been heavily skewed towards Capital and away from Labor (wages) since the seventies. The CEPR provides a graph with a another take on Productivity Gains when compared to Real Minimum Wage. When compared to Productivity Gains, Minimum Wage has trending downward.

min-wage1-fig2-2012-03

In earlier posts, Edward Lambert addresses the loss of real wages and the potential impact on the economy. As we can see, the only real option to avert another collapse is to raise labor’s share of income. This is not likely as businesses are even now fighting an increase in just the minimum wage. Businesses are trying to maximize their profits and do not want to raise labor costs. Yet this objective of theirs is going to kill the economy. The time bomb is ticking.

If you remember in the PPACA Healthcare Debate:

McDonalds was one of the restaurant employers (Papa Johns, Olive Garden, Applebys, etc.) stating the excessive cost of the PPACA would force them to cut workers hours to <30 hours to avoid providing healthcare insurance (doing so would not alleviate restaurants from penalties as the PPACA looks at total hours worked and not just employees working >30 hours). To my point, McDonalds is advocating >30 hours at its restaurants in its budget and also providing healthcare insurance(?) which by law has to be minimally equivalent to the least costly PPACA Bronze Plan. It would be interesting to see if McDonalds could provide healthcare insurance similar to the Bronze Plan at $20/month. If the plan is not the equivalent, a McDonalds associate could go on the State Exchanges and get a Bronze Plan with all of the free preventative care for ~$97/month (215% FPL – single 21 yr. old Adult) after subsidy. McDonalds would pay a penalty if full time workers sought insurance outside of McDonalds and onn the exchanges. Workers, however, under 30 years and those unable to find affordable insurance are exempt from the mandate and could purchase substitute catastrophic coverage (ACA – Standardizing Health Plans). Perhaps too, this is McDonalds strategy for providing healthcare insurance (catastrophic) to much of its workforce who are <30 years old and working within the PPACA.

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Elizabeth Warren and Glass Steagall

Via Truthout 21st centurty Glass Steagall Act

You need to know this. Senator Elizabeth Warren wants to make banking boring again. Yesterday, the freshman senator introduced the 21st Century Glass Steagall Act, which would break up the big banks, and rebuild the wall between traditional banking and Wall Street gambling. In a statement, Senator Warren said, “Despite the progress we’ve made since 2008, the biggest banks continue to threaten the economy.” Senators John McCain and Maria Cantwell, the pair who attempted a similar bill back in 2009, joined Senator Warren as she introduced her new legislation. Of course, taking on the “too-big-to-fail” banks won’t be an easy challenge. Previous attempts to reign in bank size and power were met with huge resistance from the banksters, who railed against proposals to break up the banks.

PDF is here.

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Oil Prices

The last few weeks oil prices have been moving higher and few analysts seem to understand the full story.

Clipboard01 oil 1

If there is any commodity that trades at a one world price it is oil.  So the recent weakness in West Texas Intermediate ( WTI)  is very unusual and stems from temporary bottlenecks.  Over the last few years a new major source of oil has emerged from fracking in North Dakota and other interior locations. The problem was that over the years pipelines and other supply chains for oil had been built to move crude from  coastal ports to interior locations  and refiners like Cushing, Oklahoma, not from the interior to ports. A s a consequence, when mid-western oil supplies expanded it created local surpluses and price weakness.  But now these bottlenecks are being eliminated.  In particular, two pipelines from Cushing to the Gulf Coast have been reversed and large quantities of oil are now flowing from Cushing to the Gulf ports and refiners.  As a consequence the spread between  WTI and Brent crude is  collapsing.

Clipboard01 OIL 2

Since the June low, Brent crude has risen some 6.5% while WTI has jumped some 15.7%.  This has caused the spread to collapse back to near its old pre-2011 values.  Butt in evaluating the impact of the Egyptian unrest on world oil prices the number to watch is the 6.5% increase in Brent crude, not the 15.7% increase in WTI.  But the impact on domestic gas prices is more complex.  On  the coast gas prices are experiencing small price increase in line with the move in Brent while in the interior gas prices are moving up some 10% to 20% in line with the jump in WTI.

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NRA Logic: Open/Concealed Carry, Self-Defense, Stop and Frisk, New Black Panther Party

Stepping back from the specifics/justice questions of the Zimmerman-Martin case for a minute can we take a look at the logical takeaways?

One consistent story of the last few years is the push by the NRA and allies to allow Open Carry everywhere. Whether that be bars, college campuses, National Forests, a D.C. that previously had banned almost all handgun possession the consistent position of Gun Rights advocates is that the 2nd Amendment is essentially absolute, that is not only is bearing arms a ‘could’ right almost everywhere but indeed in many places (like elementary schools) a ‘should’ right and responsibility and in at least one town in Georgia an attempted ‘must’ duty (every household with few exceptions required to have a gun). On an equal track with Open Carry is a drive to extend the right to Concealed Carry almost everywhere as well, for example the 2nd Amendment folk are this week cheering the fact that Illinois became the last State in the U.S. to allow it.

A second story, and one dramatically illustrated with the Zimmerman-Martin case, is the drive to extend the right of Self Defense quite beyond the long standing Castle Doctrine, the right to defend your home and family with deadly force against intruders, to a general Fear of Your Life Doctrine. Now almost any cop will tell you (and I have been in seminars where cops DID tell us) that in cases where the presumed victim of a crime exercises deadly force against the attacker that the 2nd best response to the arriving cops is “I was in fear for my life” (the 1st best response being of course “I want to talk to my attorney”). But it would appear that under at least Florida law the circumstances leading up to that ‘Fear’ moment hardly matter at all. Instead if for any reason you feel at legitimate fear for your life at THAT moment, no matter what events led up to it, you can defend yourself with deadly force.

Well okay, there is a logic to all that. Not one I share not least because it depends on an oft expressed but in the real world fallacy that “An armed society is a polite society”. Well no, a lot of people who carry guns not only have anger issues but are willing to take them out on just about anyone. But leaving that aside, lets just give the NRA those first arguments.

What then is the logic of supporting Stop and Frisk? I mean if you legitimately believe in striking down all laws against Open or Concealed Carry and are willing to use Congress and the Courts to enforce that on jurisdictions like DC that don’t agree, then surely you agree that New York’s Sullivan Act and all subsequent legislation controlling the possession and carrying of hand guns and presumedly other hand weapons are unconstitutional then you should be opposed to any public safety measure that involves random searches for those weapons. Which is the openly claimed justification for Stop and Frisk, nobody openly claims that the Cops have a right to search everyone’s pockets for a random doobie, even if they can arrest you if they find one during the Stop and Frisk, instead the clear justification is public safety and focuses clearly on concealed weapons. But if the NRA is up at arms about this it somehow got past me, somehow this crackdown on the Second Amendment in certain areas of NYC is not objectionable at all.

Which leads me to the New Black Panther Party. Some years back some chuckleheads decided to put on their NBPP black uniforms and station themselves outside a voting precinct in Philadelphia, one ‘armed’ with a night stick. Now despite the fact that this was a predominantly black precinct and nobody actually resident there seemed to pay it any mind, this was immediately picked up by Right leaning media as a clear attempt at nation wide voter intimidation aimed at White people and one that needed immediate investigation by the Justice Department. Against a guy carrying a stick and wearing a wannabee revolutionary uniform. Yet these same people nod approvingly when other people wearing even more military style uniforms (generally camo) insist on THEIR right to carry semi-automatic rifles openly everywhere they want without restriction.

Now there must be some logic underneath the belief that all laws against Open and Concealed Carry are prima facie likely Constitutional violations and the simultaneous belief that a guy with a stick in Philadelphia is an existential threat against American voting rights. I can’t quite grasp that logic myself but I am sure that to holders of its conclusion the rationale is as clear as black and white.

Any help here?

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Sequester Impact: 1 In 7 Seniors Struggle With Hunger

Crooks and Liars Diane Sweet writes about the impact the Sequester is having on something I used to do when working part time at an assisted care and nuring home in Bensonville, Illinois while pursuing my first BA. “Meals on Wheels” would bring a meal a day to the elderly. Since some were apartment-bound with no way to get to a store; potentially, this was their only meal for the day. Often times, I was also the only face they might see that day. In My Datsun 510 (college transportation), I would make a dozen or so stops when I did this. I can vouch for the gratitude I received from making the deliveries.

While Social Security has kept many afloat in today’s economy, 15% of the elderly still live in poverty as determined by the supplemental measurement.

65 and older poverty

As Diane Sweet points out, the Sequester has only made it worst for seniors who depend on this and other programs to make ends meet and to bring them the simplest of things . . . a meal and a face at the door.

Sequester Impact: 1 In 7 Seniors Struggle With Hunger

sequestercuts

Sequester cuts will total $1.2 trillion through fiscal year 2021. This year there is a 5.3 percent cut, totaling $85 billion. The cuts are indiscriminate and will impact nearly every federal program. Here are some of the ways this year’s cut is affecting food and hunger programs:

Meals for needy seniors lost in programs like Meals on Wheels (MOW): 4 million

Savings from cut of 4 million meals: $10 million

Rise in Medicaid costs due to cut of 4 million meals: $489 million

Net cost to U.S. federal budget due to cut of 4 million meals: $479 million

Loss of senior meals, California: 750,000

Loss of senior breakfasts, Palm Beach County, Fla.: 240 daily

Loss of senior meals in group dining facilities, Detroit suburbs and several counties: 86,000

Loss of home-delivered and group dining senior meals, La Crosse County, Wis.: 6,000

Ellie Hollander, president and CEO of the Meals on Wheels Association of America: “The real impact of sequester is that our programs don’t have the ability to expand to meet the growing need. We should be investing in these programs to ensure our seniors have the nutritious meals they need to remain healthy and independent.”

Patricia Hoeft, director of senior center nutrition, the Mid-East Area Agency on Aging (Missouri): “How do I decide which 300 seniors aren’t going to eat that day?”

Meals on Wheels recipient, home delivery program, La Crosse County, Wis.: “These meals are sometimes the only meal that I have a day. I don’t drive, so I have to rely on others to get around to doctors’ appointments. I only get $16 a month for food.”

References:

“Sequester Impact: 1 In 7 Seniors Struggle With Hunger” Diane Sweet Crooks and Liars
“Hunger and the Sequester, By the Numbers” Bill Moyers “What Really Matters”
“A State-by-State Snapshot of Poverty Among Seniors: Findings From Analysis of the Supplemental Poverty Measure” The Henry J Kaiser Family Foundation

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Medicaid Expansion in Michigan

States refusing to expand Medicaid to 133% of FPL has repercussions for those making less than 100% FPL. The PPACA was intended to setup State Exchanges where people could buy healthcare insurance and if they had an income beyond 133% FPL (Federal Poverty Level). Subsidies in the form of a tax credit would be given to each participant (sent to insurance carrier) based on their income. Remember, I said the PPACA was designed for those with incomes >133% FPL? While those with incomes >100% FPL can get subsidized healthcare insurance in the Exchanges, those with incomes <100% FPL can not get subsidized healthcare insurance in the exchanges and they would be covered by Medicaid. The states threatening to not expand Medicaid will leave a hole in healthcare insurance coverage. If the states do not expand Medicaid for single and childless married adults and expand it for married adults with children with incomes <100% FPL, they will not be able to get subsidized coverage on the exchanges either. Many state legislatures are not mentioning this to the constituency in the hope they can blame it on the PPACA, President Obama, and the Democrats. Here is how it is playing out in the State of Michigan . . . “the expanded program would cover as many as 450,000 Michiganders, according to projections. Michiagn State Senator Hune said there is evidence that about half of those in the expanded income category already have coverage of some kind” Press and Argus local newspaper. Michigan State Senator John Hune (my district) is worried about adding 450,000 more uninsured people to Medicaid if they expand it under the PPACA . I could understand the concern if:

• It was not funded. The Medicaid expansion is fully funded up to 100% for the first 3 years and gradually drops to 90% in 2020. The 90% still exceeds the unenhanced Federal Government Medicaid funding of 66% presently given to Michigan for Medicaid. Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier, State Health Facts, The Henry J. Kaiser Foundation.

• The State of Michigan already covered adults with and without children up to 100% of FPL. Michigan does not cover up to 100% of FPL for any adult. Jobless Adults with children are covered under Medicaid if they are <37% of FPL. Working adults with children are granted Medicaid coverage at <64% of FPL. Single adults were once covered at <35% FPL if jobless and <45% FPL if working. The program is closed for single adults and married childless adults. Adult Income Eligibility Limits at Application as a Percent of the Federal Poverty Level (FPL), January 2013 The Henry J. Kaiser Foundation.

Recently, the Republican dominated Michigan State Senate went on vacation rather than voting, leaving the PPACA Medicaid Expansion issue to be decided upon when they return in Fall. State of Michigan Senator Hune’s reasoning was the lack of time (two days) to decipher the Medicaid Expansion. Now this happened in an automotive state where people who work in the automotive industry usually end up losing vacation and holiday time when a production line shuts down or a shipment needs to go out. Myself, I have faced such issues when managing a $200 million/year warehouse for a major Tier One. We hung around until the issue was resolved. This is also happening 2 years after the PPACA has passed, been decided as constitutional by SCOTUS, and rolled out piece meal. So why can’t they give up a couple of days and give it a yes or no vote?

The Republican dominated Michigan State Senate and “other opponents” to the PPACA are not acknowledging the resulting hole in coverage which the PPACA will not cover. Those people who do not have an income of at least 100% FPL will not be eligible for PPACA subsidies in the State Insurance Exchanges. For example, a working women with one child making $10,000 per year is at 64% of FPL and is ineligible for a subsidy to assist in paying the ~$4,900 insurance premium levied from the State Insurance Exchange. Pre-SCOTUS PPACA June 2012 decision, the Federal Government could force states to expand the Medicaid coverage by withholding funding already allocated to states for Medicaid. Since the 5-4 majority SCOTUS ruling, SCOTUS determined the Federal Government and Congress can not force states to expand Medicaid. Using the Kaiser Interactive Subsidy Chart, one can see in the chart below, the working Michiganders caught between 36% of FPL and 100% of FPL would not be eligible for PPACA Subsidies in the eventual Michigan Healthcare Insurance Exchange.

Subsidy1

So why is Michigan State Senator John Hune so concerned about the addition of these Michiganders to Medicaid when there is no other comprehensive coverage for those with income < 100% FPL; secondly, the funding is at 100%, drops to 90% in 2020, thirdly it is a net gain for Michigan; and finally Medicaid improves upon what they may now have (telemarketed mini-meds) and would result in healthier workers? Perhaps, Senator Hune is attempting to appease a Tea Party constituency as his reasoning otherwise lacks common sense. Missing out on the funding for additional Medicaid coverage is only one aspect of the issue as there other gains to be realized from expanding. Michigan’s Economy Will Benefit from Expanding Medicaid, Families USA and Michigan Consumers for Healthcare points to a host of other benefits Michigan will forgo if it does not expand Medicaid.

• In 2016, the new federal dollars would support approximately 18,000 new jobs across all sectors of Michigan’s economy, a 0.32 percent increase over the number of current jobs in the state. This is not limited to health care jobs. Because of the multiplier effect (described above), jobs would be created in a wide range of business sectors throughout the state.

• The increased federal funding and jobs created are projected to increase economic activity in Michigan by nearly $2.1 billion starting in 2016.

• From 2013 through 2022, the Medicaid Expansion could save Michigan ~$350 million in uncompensated cost, as more people would be insured. This would offset the decreased percentage in 3 years.

• Hospitals also absorb uninsured healthcare costs. It is estimated another $317 million could be saved with the Medicaid expansion.

• In 2008, the costs of uncompensated care increased family health insurance premiums by an estimated $1,017.

• Increased state revenue from more people working.

• In this conservative get a job or get out of the state of Michigan, insured constituents would be healthier and more productive in jobs.

Solely because of politics, the Republican held Senate in Michigan is stonewalling the Medicaid Expansion at the expense of thousands (6,000 in Livingston County alone) of their constituents. Again as taken by Henry J. Kaiser Foundation, there are 1.9 million people in Michigan who have incomes <100% FPL who would not be eligible for subsidies on the PPACA State Insurance Exchange. Only adults with children are eligible today for Medicaid and only if their income is a much lower percentage than 100% FPL.

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