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

Senate to Vote on Budget Resolution

A couple of weeks ago, the House passed a Tax Reform Budget Resolution. Today, the Senate will take a vote on its Tax Reform Budget Resolution. Once passed, the differences will need to be resolved by both legislative bodies. President Trump met with the Senate Committee which included 6 Democratic Senators of which 5 are up for re-election in 2018. Trump impressed upon Senator Wyden the need for support of the Republican Tax Reform measure.

Except the call by President Trump did not get a favorable response. Senator Ron Wyden of Oregon called the President and the Republican’s bill a “con job” stating; there is a Grand Canyon-sized gap between the rhetoric surrounding this plan and reality.”

All the happy talk about helping the middle class and avoiding a giveaway to the wealthy sounds great, but it is not what the White House and Republicans have on offer.”

Going forward, the content of both Resolutions will have to be reconciled and the differences between the House and the Senate’s Tax Reform Budget Resolution assumptions resolved. The House Resolution assumes the tax plan will generate economic growth and calls for $203 billion in miscellaneous spending cuts over a decade, while the Senate Resolution assumes no economic growth and creates a deficit of ~$1.5 trillion over a 10 year period. Most likely, greater importance will be placed on the Senate’s Resolution by Republicans due to their slim majority. Passing Tax Reform before 2018 elections has taken a priority for Republicans after doing so poorly with revising, repealing, and/or replacing the ACA. Little concern is given to its long term impact. In the end and the same as the 2001/2003 tax breaks, any deficits created after 10 years result in a sunset of the bill.

After the House and the Senate agree on a Budget Resolution, the House Ways and Means Committee will release a detailed tax bill and schedule a committee vote. The Tax Reform bill will go to the House and the Senate to be passed under Reconciliation rules (a majority) vote disallowing a filibuster effort by the Dems in the Senate. This will be the same as what occurred with the ACA although the Republican Senators who opposed the ACA legislation such as Collins and McCain will support Tax Reform.

More to come.

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Precursor to Ecological Armageddon.

(Dan here…Stormy sends a reminder that the world has a real side as well…lifted from an e-mail))

Calling out the precursor to an Ecological Armageddon.

Thought you might like to see this study—also written up in Guardian.  Economists are totally irrelevant.   Profit and money are their game….and that game is ending within our children’s lifetime.

More than 75 percent decline over 27 years in total flying insect biomass in protected areas

See also:

Warning of ‘Ecological Armageddon’ after dramatic plunge in insect numbers

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Iraq Conquers Kirkuk

Iraq Conquers Kirkuk

The central Iraqi government based in Baghdad has conquered oil-rich and ethnically-mixed Kirkuk from its recent Kurdish rulers, who hoped to continue ruling it as part of their recently declared independent state of (Iraqi) Kurdistan, clearly consisting of three provinces, but which they also wanted to include the fourth one of Kirkuk province. This now appears not to be going to happen.

Juan Cole has made an excellent discussion of this, noting 7 reasons why this is not about Iran as many commentators in the US claim. I shall not repeat most of his arguments here but suggest people look at the link. I shall note the crucial point that what looked like it was going to be a major military conflict over Kirkuk thankfully turned out not to be is that the Kurdish Pesh Merga, who were ruling Kirkuk, actually are tied to the main opposition party in Kurdistan, the Patriotic Union Party (PUK) led by the Talabani family,whose old patriarch, once a president of all of Iraq, has just died. The Pesh Merga has simply withdrawn peacefully from Kirkuk, handing a major embarrassment to Massoud Barzani, the current president of newly independent (maybe) Kurdistan, who leads the center right Democratic Party of Kurdistan (DPK). This suggests that while the opposition nominally supported Barzani’s independence referendum, they lack enthusiasm, and Barzani may end up in trouble as things are not going well with this. As I noted in a previous post, Barzani is in a tight position because he canceled an election in 2015, and Kurdistan’s economy has been weak due to low oil prices.

I also add that apparently the fall of Kirkuk temporarily shuts down 350,000 barrels of oil per day production, which will add to the ongoing increase in world oil prices.

Barkley Rosser

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Underlying industrial production trend ex-hurricanes remains positive

Underlying industrial production trend ex-hurricanes remains positive

A few weeks ago, I suggested a hurricane workaround for industrial production. That approach was to average the four regional Fed indexes excluding Dallas, and add the Chicago PMI, and finally discount for the unusual strength this year in these regional indexes vs. production.

Here was my conclusion:

The average of the 5 is 22.9.
Dividing that by 5 gives us +.5.
Subtracting .3 gives us +.2.

We can be reasonably confident that underlying trend in industrial production in September, despite the hurricanes, has been positive.

That approach was borne out yesterday when overall September Industrial Production was reported at +0.3%, with manufacturing production up +0.1% as shown in the graphs below.:

First, here’s the longer term view,. Note that the decline in 2015 was due to weakness confined to the Oil Patch:
Here is the close-up of this year:
That’s the good news.  The bad news, of course, is that even with this improvement, the big (revised) August decline of -0.7% in production, and -0.2% in manufacturing has not been overcome, and production is still below where it was this spring.

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Race is a Social Construct

Back to back on my to read list were two articles that made an odd juxtaposition. First up was Race Is a Social Construct, Scientists Argue in the once great Scientific American. Here’s a representative blurb:

More than 100 years ago, American sociologist W.E.B. Du Bois was concerned that race was being used as a biological explanation for what he understood to be social and cultural differences between different populations of people. He spoke out against the idea of “white” and “black” as discrete groups, claiming that these distinctions ignored the scope of human diversity.

Science would favor Du Bois. Today, the mainstream belief among scientists is that race is a social construct without biological meaning. And yet, you might still open a study on genetics in a major scientific journal and find categories like “white” and “black” being used as biological variables.

The article goes on as a confused mish-mash, and includes a comment that one researcher feels that

modern genetics research is operating in a paradox, which is that race is understood to be a useful tool to elucidate human genetic diversity, but on the other hand, race is also understood to be a poorly defined marker of that diversity and an imprecise proxy for the relationship between ancestry and genetics.

Of course, when people think “race” they think ancestry. Ask a random person to classify people whose ancestors lived in what is now Japan, Sweden, and Uganda 2,500 years ago and he/she will, with little difficulty in most cases, classify those people as “Asian,” “European” and “Black,” respectively. Other objections to discussing race include the fact that people travel, and sometimes procreate after they’ve moved. Additionally, the fact that not all White people are exactly alike, and not all Black people are exactly alike, etc.,  is also viewed as problematic.

Next up on my reading list was Impact of common genetic determinants of Hemoglobin A1c on type 2 diabetes risk and diagnosis in ancestrally diverse populations: A transethnic genome-wide meta-analysis in PLOS Medicine. Here are a few quotes:

Blood glucose binds in an irreversible manner to circulating hemoglobin in red blood cells (RBCs), generating “glycated hemoglobin,” called HbA1c. HbA1c is used to diagnose and monitor diabetes…. About 11% of people of African American ancestry carry at least one copy of this G6PDvariant, while almost no one of any other ancestry does. We estimated that if we tested all Americans for diabetes using HbA1c, about 650,000 African Americans would be missed because of these genetically lowered HbA1c levels… This work supports a role for a precision medicine application to reduce race-ethnic health disparities using HbA1c genetics to improve T2D diagnosis and prediction and to inform screening strategies for T2D across the African continent where the prevalence of the G6PD variant can reach 20%.

From what I can tell reading medical and genetic literature, there is a collage industry in which scholars tell us that “race is a social construct without biological meaning.” But there is a second cottage industry in which a different group of scholars looks for genetic manifestations that strongly correlate with that particular biologically meaningless social construct.

The first cottage industry also warns us (to quote the Scientific American article again) that:

Assumptions about genetic differences between people of different races have had obvious social and historical repercussions, and they still threaten to fuel racist beliefs.

Meanwhile, members of the second cottage industry seems hell bent on trying to save lives. It is all very odd.

 

Update, 10/18/2017, 5:48 AM PST – minor grammatical error corrected by removing the word “with” following the word “mish-mash.”

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A housing teaser

A housing teaser

Here is something I have been working on for the last month.  As it happens, last week Kevin Drum posted some aspects of the same data.
House prices have exceeded by a substantial margin median household income:
But the monthly mortgage payments have not:
This is because, while the prices of houses have increased, mortgage interest rates have decreased over the same period.
So, saving for the down payment is considerably more difficult (unless, e.g., parents are helping out), but once the house is bought, the monthly carrying cost for living in the house really hasn’t gone up at all.
 What’s missing in this discussion is comparing both household income and mortgage payments to the alternative (leaving aside living in mom and dad’s house) of paying rent.
I still have some number crunching to do, but once the three way comparison is finished, it will be a really illuminating look into how much the alternatives for shelter really cost.  Stay tuned.

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WA Senator Murray Thinks She has a Deal to Save the CSR

Sen. Lamar Alexander (R-TN), chairman of the Senate health committee, said he hopes to release a bill this week, in collaboration with Sen. Patty Murray (D-WA), the senior Democrat on the committee, to fund the cost-sharing reduction payments and give states more leeway on insurance rules.”

Not sure why Senator Murray feels the need to go down this avenue when the preceding Executive Order already wandered into greater flexibility for states, states rights, and who decides what. As has been explained by the CBO, Drum, other pundits, and myself; the loss in out-of-pocket subsidies will result in increased premiums which are “still” paid for by the ACA between 138% and 250% FPL. In some cases, Bronze plans can be had for free, Silver plans become cheaper, and Gold plans offering better care and lower deductibles attainable.

Senator Murray is giving away the store if what Senator Alexander says is true. “Alexander said Murray agreed to a deal giving states ‘meaningful’ flexibility on coverage rules. Asked what the stumbling blocks to the deal are, Alexander replied: ‘The definition of meaningful.'”

We have already seen what the word meaningful means with regard to the expansion of Medicaid in some states . . . it never happened. I am hoping Senator Murray has second thoughts and decides not to go farther with her thoughts on negotiating with the Republicans as she is off base and we will be better off by not altering what is law already and it is the ACA.

Premiums will go up in 2018 as no one is going to trust Trump regardless of any deal reached with the Republicans.

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A thought for Sunday: the Rule of Gerontocracy

A thought for Sunday: the Rule of Gerontocracy

The US looks like government of, by, and for senior citizens.
President Donald Trump just had his 72nd birthday. He assumed office at age 71, the oldest person ever to do so.
In Congress, Senate Majority Leader Mitch McConnell is 75 years old.  His Democratic counterpart, Charles Schumer, is a relatively spry 66. The median age of US Senators is 63. A full 30 Senators are age 70 or older. Sixteen of them are over 75. Nine are over 80!
The oldest, Diane Feinstein of California, is 84 years old and just announced that she intends to run for re-election. Should she win, by the end of her term, she will be 91 years old — if she survives. The average life expectancy for an 85 year old woman is 6.9 years. In other words, she will have nearly a 50% chance of dying in office before she completes her term.
In the House of Representatives, Speaker Ryan is the baby of the group at age 47.  Democratic Minority Leader Nancy Pelosi is 77. The average House member is 57 years old, the oldest average ever. Over 30% of the Members are age 65 or older. Over 15% are over 70. Twelve Members are over 80!
The median age of Justices of the Supreme Court is 67. Two Justices are over 80.  One is 79. In the 19th Century, the average Justice served about 10 years. Now they sit on average close to 25 years.
In short, the majority of the leadership of all three branches of the US government are old enough to collect Social Security and Medicare.
Forget Boomers, most of the US leadership belongs to the Silent Generation, and formed their basic political opinions in the 1950s during the days of Ike and Senator Joseph McCarthy, and when court-ordered racial integration was just beginning.  And it shows.

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Is This Why Wages Are Low?

by Hale Stewart (originally published at Bonddad blog)

Is This Why Wages Are Low?

These are two graphs from a post over at the Center for Equitable Growth. 

The top chart shows that the relationship between unemployment and wage growth isn’t as strong as you’d think.  Recent research highlighted by Fed President Bullard made the same observation.  But the bottom chart — now that’s what a tight correlation looks like!

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