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

Bluffing??

Lifted from Robert’s Thoughts

Obviously the main chance is that Boehner is bluffing and that he will bring a clean debt ceiling increase bill to the floor of the House and it will pass mostly with the votes of Democrats.  He would then probably lose the gavel to some new Speaker which will make us cry thinking of Boehner.  The problem with hoping for this, other than hope not being a plan, is that Boehner won’t cave till the last minute (he has made that clear) and may not correctly judge exactly when the last minute arrives.  I will assume that the Republicans won’t just pass a clean debt limit increase — that they will demand at least a fig leaf.

Now if it is something which amounts to nothing like the last time when it was that the Senate doesn’t get paid till it passes a budget resolution, this might do the trick.  Obama might sign it.

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Why You Shouldn’t Expect a Compromise On the Government Shutdown Anytime Soon

From Policymic on the incremental re-instating government services:

http://www.policymic.com

 

Why You Shouldn’t Expect a Compromise On the Government Shutdown Anytime Soon
Don’t get your hopes up about a compromise on the government shutdown anytime soon. The Pentagon has decided to bring 350,000 employees back to work and the House has votedunanimously (no, I’m not kidding) to pay furloughed workers when they return. This is great news for government employees and the economy, but it also means Congress won’t feel much pressure to strike a deal on the budget. And to make matters worse, the leaders in Congress are sticking to their guns: House Speaker John Boehner says he won’t approve a budget or raise the debt ceiling unless Obama puts off his health care law.
The dirty secret of the government shutdown – it was in the works for months (NY Times).
Everything you need to know to get caught up on the government shutdown (WaPo).

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Health Care Thoughts: Really Narrow Networks

by Tom aka Rusty Rustbelt

Health Care Thoughts: Really Narrow Networks

“Narrow networks” are in the news as the ACA exchanges begin to do business (or not?).

From the Columbus Dispatch: http://www.dispatch.com/content/stories/local/2013/10/07/low-cost-premiums-thin-out-providers.html

There may be other problems besides low payment rates. According to the Medical Group Management Association (MGMA) contracting is slow, uncertainty is high, and physician groups have not been read in to the administrative practices of the exchange plans.

(Disclosure: I have done editorial work and seminars for MGMA.)

But wait, we have almost three months, right? Insurance contracting and administrative processes can be put into place, right?

Three months is not really long enough. Physician practices may be satisfied picking up new Medicaid patients, or just staying with the existing practice base, or playing wait-and-see.

The insurers should have had networks fully in place before October 1. Now we scramble. Again.

 

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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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THE CBO AND SOCIAL SECURITY… HYSTERIA and HONEST MATH

by Dale Coberly

 

THE CBO AND SOCIAL SECURITY

HYSTERIA and HONEST MATH

The Congressional Budget Office (CBO) recently released a new projection for the costs of Social Security  [no citation.  I looked up the link in the AEI article (below) and did not immediately find a projection for SS].  

They say that increases in life expectancy will increase costs, and increases in unemployment will reduce revenues.  They say an “immediate and  permanent” 3.4% increase in the payroll tax would be needed to pay or the expected shortfall over the next 75 years.  Please note that this new projection is a projection of increased costs due to changes in life expectancy and the wages of workers. It is NOT due to any inherent flaw in Social Security, or any failure to “fix” it sooner.  SS was designed to help workers during hard times.  CBO is projecting hard times.  That is exactly NOT the time to cut it.

Andrew Biggs and the American Enterprise Institute say this increase is “almost twice as much” as the last time CBO projected a  needed “immediate and permanent” increase (of 1.9%).  This means, they  say, “we must act now.”  By “act now” they mean “cut benefits,” which they have been calling for for the past twenty years.  They have no interest in an “immediate and permanent” increase in the payroll tax.  But with the help of the Washington Times Washington Times they hope to stampede you into believing a 3.4% increase in the payroll tax would be a staggering burden.

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John Boehner Demands Fairness to Arkansan Butch Matthews and His Wife, and Offers to Give Up His Own Healthcare Insurance, Just to Start the Fairness Thing Rolling.

WASHINGTON — House Republicans emerged from a closed-door meeting on Friday with no new strategy to end the budget standoff and an angry plea to President Obama to negotiate over his health care law.

“This isn’t some damned game,” said Speaker John A. Boehner, his voice rising in anger. “The American people don’t want their government shut down, and neither do I. All we’re asking for is to sit down and have a discussion, reopen the government and bring fairness to the American people under Obamacare.”

With No New Plan, Boehner Makes Angry Plea on Shutdown, Jonathan Wiesmann and Ashley Parker, New York Times, today

I totally agree that we need fairness to the American people under Obamacare.  But which, presumably, Boehner means that Obamacare should be amended to ensure that everyone has medical insurance with full benefits (the “gold” policy) without struggling to pay the premiums.

No more having to pay $13,000 per year for a married couple with $10,000/yr., $150-per-office-visit, deductibles.  Even if, like Arkansan Butch Matthews and his wife, you’re a lifelong solid Republican.

No more being rejected for healthcare coverage because of a preexisting condition.

No more fear of bankruptcy or the loss of your home, or both.

No more being asked the status of your mortgage payments and car payments in a hospital emergency room, as a prerequisite to non-lifesaving but necessary emergency treatment.

No more not being treated like citizen of any advanced nation in the world except the United States, when you need medical care.  Which you probably aren’t. Or like you’re not a member of Congress or the spouse or child of one.  Also which you probably aren’t.  No, sir.  No, ma’am.

Oh, but wait.  I think I misunderstood Boehner’s comment about fairness to the American people—a comment he has made, repeatedly, this week.  Apparently, he didn’t mean that the multitudes of American people who now have no access to healthcare insurance, or have huge deductibles and struggle to pay the premiums and those deductibles because they have lower incomes than John Boehner and his colleagues, and who now will have medical coverage without struggling financially to pay for it while still worrying about the huge costs if they do need major medical treatment, will now have access to affordable and comprehensive medical insurance.

What he actually meant is that the Republicans are demanding that they and their congressional colleagues and their families henceforth be denied healthcare benefits for preexisting conditions; that those who have no persisting conditions and therefore can get medical insurance have huge deductibles and pay premiums that they can afford or instead have comprehensive insurance and pay their utility bills only every other month in order to be able to afford the premiums; and that they take pay cuts sufficient to make the payment of those difficult financially.

It is, after all, fairness that they’re demanding.  Parity.  And since they now say that they’d settle for just a one-year delay in Obamacare in order to pass a short-term budge and a debt-ceiling increase, they are demanding only a one-year removal of their own healthcare benefits.  At least until next year, when they renew their demand, for another year.

I suggest that Boehner contact Mr. Matthews and his wife directly and tell them the good news. They’re sure to welcome the fairness.

 

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Rand Paul* Says That If He Becomes President, He Will Give In To Dem Demands To Dictate Union and Tax Law. Oh, and the Farm Bill and Environmental Law. Really.

Hot Mic Catches Mitch McConnell and Rand Paul Scheming

Here’s the transcript, notice the focus on principle:

PAUL: I just did CNN, and I just go over and over again: “We’re willing to compromise! We’re willing to negotiate.!” I don’t think they poll tested “we won’t negotiate.” I think it’s awful for [Democrats] to say that over and over again.

MCCONNELL: Yeah, I do too and I, and I just came back from that two hour meeting with them and that, and that was basically the same view privately as it was publicly.

PAUL: I think if we keep saying, “We wanted to defund it. We fought for that and that we’re willing to compromise on this,” I think they can’t, we’re gonna, I think… well, I know we don’t want to be here, but we’re gonna win this, I think.

Economic Policy Journal, yesterday

As a liberal Democrat, I say: AWESOME! I can’t wait to vote for Paul for president in 2016!

Okay, okay, he’s really just saying that he’ll give in on only a few of those laws, not on all of them.  But still!

CORRECTION: Originally, the title of this post said “Ron Paul,” rather than “Rand Paul.”  (Arrrgggh. Talk about stepping on your own punch line!)

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Dear GOP: a Daily Kos staff reminder on the constitutional process for changing the law

by Linda Beale

Dear GOP: a Daily Kos staff reminder on the constitutional process for changing the law

The Tea Party/GOP coalition has often talked about the importance of the Constitution, but one can’t help wondering if the recent extortionist behavior doesn’t belie that, when the governnment shutdown it has caused as a means of extorting its way to getting rid of Obamacare is costing us $300 million a day. And getting back up to snuff after the shutdown ends will be extra-expensive–an inefficient increase in the deficit that the right complains so much about.  Those extra expenses will claim even more of thetax revenues that we don’t have because we still tax the wealthy people’s income at ridiculously low preferential rates (the capital gains preference, the carried interest debacle) and we have tax rate brackets that ignore the reality of CEOs who earn 400 times what their average worker earns.

The Daily Kos staff came up with a thoughtful bit to remind the right how government is supposed to work–a letter to Dear GOP.  Excerpts, self-explanatory, follow.

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Chris Hayes, Why don’t you have me on as a guest?

On October 2, 2013 Chris Hayes had on Larry Kudlow to discuss the economics of the government shut down.  All I can say is, I could not believe he was the one Chris went to for insight.  Maybe he had to because, you know, Kudlow is related to him via the network they work at.  But really, Chris could you not get your bosses to understand how someone like Kudlow professing on your show does harm to your identity and thus the relationship you have with your viewers?  

Let me be clear, my impression of you and your show is that you strive to deal in facts.  I have seen you have people of the conservative ideology on, but they have seemed to be people who use facts interpreted via their ideology.  That’s a conversation.  But Kudlow promoting “supply side”?  I mean is anyone in the real world even using this phrase anymore? 

My hope with this post is that  our good readers will post corrections to Kudlow and note why your guest is completely full of crap thus giving you a little help and cover as I’m going with the idea that your boss made you do it.  But more importantly, your viewers deserve not having to have this crap pushed at them.  I have found people know the Kudlow view of the economy is baloney, but the don’t know why it is baloney and you having him on only makes their angst worse. 

Let me get to it: Do you really believe your viewers bought this nonsense?  Do you believe your viewers do not know it is nonsense?

 

Visit NBCNews.com for breaking news, world news, and news about the economy

 

Do you really want to promote and by virtue of it being on your show endorse the idea that the problem with our economy is businesses being taxed too much AND Obamacare?

 

Visit NBCNews.com for breaking news, world news, and news about the economy

Considering the following, you have been used man.

 

Visit NBCNews.com for breaking news, world news, and news about the economy

 In the end, you confirm you are with him… regarding the need for the economy to grow.  But, I think most people will only hear that you are with him.  Not good.  Not good for you, not good for this nation.

So, please contact us here at Angry Bear.  Anyone of us are more than capable of explaining the mess this economy is in and why the Kudlow’s of the world no longer have any credibility. 

Oh, to you MSNBC  what the hell is the matter with you?  Is Kudlow loosing his audience so you figure putting him on with Chris will boost his cred? 

 

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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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