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

Summers ignores politics, unfairly blames progressives

Larry Summer is still criticizing the American Recovery Plan.  Summers:

In his latest attack on the recent rush of stimulus, Summers told David Westin on Bloomberg Television’s “Wall Street Week” that “what was kindling, is now igniting” given the recovery from Covid will stoke demand pressure at the same time as fiscal policy has been aggressively eased and the Federal Reserve has “stuck to its guns” in committing to loose monetary policy.

“These are the least responsible fiscal macroeconomic policy we’ve have had for the last 40 years,” Summers said. “It’s fundamentally driven by intransigence on the Democratic left and intransigence and the completely irresponsible behavior in the whole of the Republican Party.”

Summers, a top official in the past two Democratic administrations, has emerged as one of the leading critics among Democrat-leaning economists of President Joe Biden’s $1.9 trillion pandemic plan. Summers warned in the interview the U.S. was facing a “pretty dramatic fiscal-monetary collision.”

He said there is a one-in-three chance that inflation will accelerate in the coming years and the U.S. could face stagflation. He also saw the same chance of no inflation because the Fed would hit the brakes hard and push the economy toward recession. The final possibility is that the Fed and Treasury will get rapid growth without inflation.

I don’t have any expertise on the macroeconomic issues, but I do disagree with his exclusive focus on macroeconomic policy, and with his view of the politics, especially his criticism of the Democratic left. 

Let’s assume that the ARP steps too hard on the gas pedal and creates some risk of inflation/stagnation/recession.  That could happen, and in a perfect world Congress might have passed a smaller bill today focused on preventing immediate suffering, and then passed additional stimulus if needed in 6 or 12 months.  I think Democrats had two good reasons not to do this.

Joe Biden Temporaily Improves Healthcare and Cuts ACA Costs

What I am writing about today is the up-and-coming changes to the PPACA resulting from the signing of the American Rescue Plan Act of 2021 by President Joe Biden. This is not Medicare-for-All or Single Payor; however, it is a big leap forward in making healthcare affordable for the next two years. Improved affordability will come with cost analysis and the impact on pricing and reduced administrative costs. I have touched upon those costs in early posts.

Less Costly Healthcare Insurance for All Ranges

The first chart shows “Before 2021 Covid Relief Bill passing” income percentages (under Current Law), and after the “Covid Relief Bill passes” income percentages (Under Section 9661).

The Income Range sets the lower and upper parameters (percentage) for income to qualify for a particular income range.

Please note the greater than 400% FPL Cost is capped at 8.5% of Income which was not available previously. Keep in mind an employer sponsored family healthcare plan is ~$20,000 annually .

I have included household Poverty Guidelines by family size for the lower 48 states in the next chart. For Hawaii and Alaska, the parameters can be found at HHS Poverty Guidelines For 2021.

How this Bill Passed and More of Its Content