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

Obamacare Defunding and the Mandate

This is pure political fantasy. I will pretend to take Republicans seriously. They claim that Obamacare is unpopular (true) and tha the people want them to defund Obamacare. It is clear that the most unpopular part of Obamacare is the mandate (the Medicare entitlement reform which is included in House budget resolutions and of which they demand much more is also unpopula). The mandate is also the best known part. People worry about it. I worry about what will happen when people realize ust how toothless it is (it’s a voluntdate not a mandate) People who don’t have insurance and who aren’t exempt because insurance would cost too high a fraction of their income are supposed to pay a penalty (or tax according to the Roberts Court). If they don’t, they will get a firmly worded letter and will not get a tax refund. The normal IRS enforcement mechanisms are forbidden (this means no tax leins not just no arrests).

OK so let’s pretend that Republicans get their way and Obamacare is defunded so no money may be spent implementing or enforcing Obamacare. Does this mean that people who owe and don’t pay the penalty get their refunds ? Well no, money may be disbursed from the Treasury only as appropriated by law by Congress. The IRS can’t send people money if, according to the ACA which is still the law of the land, they aren’t owed money. The defunding just means the IRS can’t pay some poor paper pusher to decide if someone owes the penalty. It doesn’t allow the IRS to send out checks to people who are, according to the law, owed nothing just because it hasn’t checked.

In fact, I don’t think the IRS would be allowed to send anyone refund checks. People with health insurance don’t have to pay the penalty and get a refund (or owe the “amount you owe”) according to the plain old garden variety tax code. But to check the documents that prove that the tax return filer has insurance the IRS would have to spend money implementing and enforcing Obamacare.

I think the Republican proposal is to leave the tax code as it is (including the penalty) and forbid any implementation.

Everyone who would suffer from the mandate would, as far as I can tell, suffer equally from defuning. Also AFAIK everyone who wouldn’t suffer from the mandate would suffer from defunding.

I think they are counting on losing this one. They couldn’t possiblu afford to win it.

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Balkanization of the Internet: Brazil’s Response to the NSA

“To extricate” Brazil from the reach of the NSA and American technology giants, Dilma Rousseff, President of Brazil, has proposed doing the following:

constructing submarine cables that do not route through the US, building internet exchange points in Brazil, creating an encrypted email service through the state postal service and having Facebook, Google and other companies store data by Brazilians on servers in Brazil.

To protect its population and its government, all countries may have no choice but to follow Brazil’s lead: control all points of Internet entry and exit, as well as insist that any data stored by any foreign company be under its control.

What Brazil is doing makes perfect sense.  But how can Brazil protect its inter-country communications, if those communications must, of necessity, pass through NSA hands? A giant Brazilian company runs a mine in Sudbury, ONT.  (Sometimes, the relationship between Canadians and Vale, the Brazilian company, are a bit…rocky.  If that relationship becomes too dicey, Canada, which is very cozy with the NSA, may well take a peek at any Vale communications leaving Canada for Brazil. Or maybe a competitor with NSA connections wants to take a peak.)

If the answer is a Brazilian mail carrier, say goodbye to any global mailing system. Microsoft Outlook? Gone.  Google’s Gmail? Gone. Every country will have its own mail carrier.  China will have its mail server.  Russia will have its mail server.  We will have to work out how those hundreds of mail servers communicate. 

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For the Record, No: A Review Too Late

Were Lawrence Summers what his critics say he is—a political hack with an inflated sense of his own skills that is matched only by his sense of entitlement, accompanied by a grotesquely non-realistic view of his accomplishments—this is precisely the letter he would write.

Felix, who was The Voice of Reason on this  before and after, has more.

(h/t DeLong; subtitle blatantly “borrowed” from WalterJon)

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Disingenuous? or heading toward defiant and impudent

Disingenuous? or heading toward defiant and impudent.

Yves Smith says:

One of the aggravating facts of life in bureaucracies is having to contend regularly with misrepresentation. And I don’t mean faux friendly corporate bromides like “We’re here to help,” but weasely, technically accurate but substantively misleading statements. A Treasury reply to some questions from Elizabeth Warren is a classic in this genre.

Read more at Naked Capitalism

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Deadweight Loss Re-defined

Via Vox come these thoughts on the interface between the language of economists and general media and audience.

Deadweight Loss Re-defined

Economists usually think of taxation as inefficient. This column argues that the anti-tax rhetoric evident in much lay discussion of public policy draws considerable support from the prevalent negative language of professional economic discourse. Optimal income taxationdoesn’t have to employ the pejorative concepts of inefficiency, deadweight loss and distortion; and this column argues that it is high time for economists to discard them and make analysis of taxation and public spending distortion-free.

The anti-tax rhetoric evident in much lay discussion of public policy draws considerable support from the prevalent negative language of professional economic discourse. Economists regularly write about the ‘inefficiency’, ‘deadweight loss’, and ‘distortion’ of income taxation.

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Will You Be Eligible for A Government Subsidy When You Buy Health Insurance in 2014? Check out Your “Modified Adjusted Gross Income” (MAGI) –You May Be Pleasantly Surprised

Maggie Mahar comments on the Modified Adjusted Gross Income and how this may positively impact your eligibility for healthcare insurance on the state exchanges.

Before writing this post, I had no idea how to calculate my “Modified Adjusted Gross Income” (MAGI). But I did know that this is the number the IRS will use when deciding whether people purchasing their own insurance in their state’s online marketplace (a.k.a. Exchange) will qualify for a tax credit to help them cover their premiums.

This piqued my interest.

The first thing you need to know is that your modified adjusted gross income (MAGI) may well be lower than your gross income.

When calculating your MAGI, you can subtract certain items from your adjusted gross income including: student loan interest, certain moving expenses, contributions to an IRA, some self-employment expenses, and any alimony that you pay.

As a result, an individual grossing $50,000 (or a family of four with income of $98,000) might well discover that after they deduct these items from, their MAGI falls under the cut-off for subsidies ($45,960 for an individual, $62,040 for a couple, $78,120, for a family of three, $94, 200 for a family of four)

This is why, even if think you earn a few thousand too much to qualify for government help, you should ask whoever prepares your taxes about your MAGI—and perhaps think about upping your contribution to an IRA.

Kiplinger’s Kimberly Lankford, suggests other ways to lower your MAGI by “selling losing stocks or boosting business expenses to offset self-employment income.” But, she warns, “Be careful with moves that could boost that your MAGI and make it more difficult to qualify for the subsidy — such as converting a traditional IRA to a Roth.” .

Clearly MAGI is a tricky number. For more detail see this -page definition from UC Berkeley’s Labor Center. It is far and away the best, and clearest description of how to calculate MAGI that I have found.

Cross Posted from The Health Beat Blog, Maggie Mahar, Will You Be Eligible for a Government Subsidy .  .  .

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“The Rest of The Story”

Somewhere along the way, the naysayers and the Repubs will find a way to turn this into a negative “Trader Joe’s Cut Health Benefits Last Week”  Last week Ezra Klein wrote about Trader Joe’s decision to cut health insurance benefits for employees who work fewer than 30 hours a week. After that, one reader forwarded a Trader Joe’s response to his letter inquiring about the change in benefits.

“Thank you for writing to us. It’s possible you have been misled, at least to some degree, by the headlines in some articles regarding our reasons for implementing the [Affordable Care Act] in January. We’d like to take this opportunity to clarify some facts.

For over 77% of our Crew Members there is absolutely no change to their healthcare coverage provided by Trader Joe’s.

The ACA brings a new potential player into the arena for the acquisition of health care. Stated quite simply, the law is centered on providing low cost options to people who do not make a lot of money. Somewhat by definition, the law provides those people a pretty good deal for insurance … a deal that can’t be matched by us — or any company. However, an individual employee (we call them Crew Member) is only able to receive the tax credit from the exchanges under the act if we do not offer them insurance under our company plan.

Perhaps an example will help. A Crew Member called in the other day and was quite unhappy that she was being dropped from our coverage unless she worked more hours. She is a single mom with one child who makes $18 per hour and works about 25 hours per week. We ran the numbers for her. She currently pays $166.50 per month for her coverage with Trader Joe’s. Because of the tax credits under the ACA she can go to an exchange and purchase insurance that is almost identical to our plan for $69.59 per month. Accordingly, by going to the exchange she will save $1,175 each year … and that is before counting the $500 we will give her in January.

While we understand her fear of change, at her income level this is a big benefit that we will help her achieve.

Clearly, there are others who will go to the exchanges and will be required to pay more. That is usually because they have other income and typically a spouse who had a job with no benefits and they do not qualify for the subsidies under the ACA.

One example of that we had yesterday was the male Crew Member who worked an average of 20 hours per week but had a spouse who is a contract consultant who makes more than $200,000 per year. The Crew Member worked for the medical benefits and unfortunately for them they are likely to have to pay more because of their real income. We understand how important healthcare coverage is to our Crew Members and we are pleased to be able to provide and support this program.

We do hope this information helps, and we appreciate your interest in Trader Joe’s.”

It is rare to see a company which actually thinks beyond the profit margin. Maybe I will be proven wrong on this; but, it looks like TJ may have done the right thing. For those employees who may have other income, TJ provided an $500 to compensate for differences. Hat Tip to Hullabaloo, Digby – Trader Joe Explains Itself (and Does It Well)

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Ohio Governor John Kasich to Follow Panera Bread CEO’s Lead in Taking the SNAP Challenge

In case you missed it, Panera Bread CEO Ron Shaich (founder) is taking the SNAP Challenge.

“in an effort to find out how the other half lives by limiting grocery purchases to the average benefit amount shelled out by the Supplemental Nutrition Assistance Program. It’s not much. A typical food stamp recipient receives just $4.50 per day in food aid, according to Feeding America.

The CEO and founder of Panera Bread,Ron Shaich has an income of over $4 million per year and can easily afford more than the supplemental $4.50 per day SNAP allots for food expenditures to single people.  Shaich’s effort is to increase the awareness of hunger in the US. His efforts come as Congressional Republicans and state governors such as John  Kasich of Ohio attempt to cut back on the Food Stamp program by forcing able-bodied-people to work even when no paying jobs exist. I am not going to say Ron Shaich has never gotten his hands dirty; but, I will pass on some of his comments on cutting back on his meals.

“Over the last few days, my thoughts have been consumed by food. When is my next meal? How much food is left in my cabinet? Will it get me through the week? What should I spend my remaining few dollars on? What would I eat if I had no budget at all?” he writes.

On top of the anxiety about food is actual hunger. Shaich notes that he opted to spend his budget on cereal and pasta, which has left him “feeling bloated . . . yet not really full.”

the feelings of anxiety and hunger led to another sensation: “an underlying sense of resentment.” For him, it was sparked by driving past restaurants he usually frequents. For a colleague trying the same challenge, resentment was triggered by “the price difference between branded and off-brand foods.”

One in seven people rely on the SNAP (Supplemental Nutrition Assistance Program) program to supplement their food expenditures. 75% of all people on SNAP spend more on food than what SNAP allots to them under its guidelines. Ron Shaich goes on to note;

“Hunger is not synonymous with unemployed or homeless,” he writes. “The inability to put food on the table is not equivalent to lazy.”

And what about Ohio Governor John Kasich taking up the SNAP Challenge with Panera Bread CEO Ron Shaich? I was dreaming; although, that suit John wears is beginning to look a bit tight. Republican Governors are good at making demands on people with little political power. Rather than forcing 130,000 people to work in a state where ~15,000 jobs exist according to the Ohio Jobs Office; maybe, Governor John Kasich should take up the SNAP challenge and see how some of his constituents are living. Or maybe Governor Kasich will accept a challenge from one of his constituents to do an honest day’s work and live off SNAP for food? Doubtful  .  .  .

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However, we did try it.

by Robert Waldmann

“If non-bureaucratic mechanisms like markets or decentralized experimentation could achieve the same or better results at less cost and without the political taint of Big Government, why not try it?* “ Might have been an interesting question in 1993, although it starts with an “If” clause which assumes the new Democrats are right.

However, we did try it. I think the evidence is that in huge swathes of the economy bureaucratic mechanisms are much more efficient than non-bureacratic mechanisms. One, obviously, is health care where the spending is systematically higher in countries with a non-bureaucratic approach without better outcomes. “non-bureacratic mechanisms like markets” certainly includes Medicare advantage which achieved the same results at 14% higher cost.
I’d say that outsourcing intelligence to Booz Allen Hamilton worked fine if you consider (as I do) the effort to be mainly a threat to our liberties, so complete failure is better than operational success.

I don’t think outsourcing defence of diplomats to Blackwater worked that well. Also Benghazi.

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Objective reality and intra-Dem debate

by Robert Waldmann

On Ed Kilgore’s thoughts on Peter Beinart.

He wrote:

he mentions both the Washington Monthly and the New Republic (which he used to edit) as onetime journalistic bulwarks of the soon-to-be discarded Clintonism (and Obamism) that have now “moved left,” I would point out to him the not-exactly-distant-past March/April issue of WaMo devoted to praise of Obama as great president who continued Clinton’s legacy. My own basic view is that Clinton and Obama and virtually all center-left folk have “moved left” in response to conservative counter-revolutionary activity, the disastrous consequences of the Bush Era, and other manifestations of objective reality. As my resolutely New Demish friend Will Marshall observed nearly a decade ago, “we’re all populists now” thanks to W., who’s now being denounced as a RINO piker by most of his GOP successors.

I comment:

“other manifestations of objective reality” … heh indeed.   I think that in the intra-Democratic party debate, reality has a clear liberal bias.   Let’s pretend that there is no Republican party (it’s real fun to do that).  There would still be new information relevant to the debate between the past eventheliberal Peter Beinart and the current actually liberal Peter Beinart (I should admit that I haven’t read the recent Beinart article).

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