Archive for the ‘Policy’ category

Fiscal Conservatives

June 4, 2013

via TPM, this:

The states that declined to expand Medicaid will lose out on a total of $8 billion in federal funds, have millions more residents uninsured, and spend about a billion dollars more on uncompensated care as compared to states that accept the expansion.

That’s the conclusion of a new study in Health Affairs by two RAND Corporation scholars, who model the impacts on the first 14 states that opted out of Obamacare’s Medicaid expansion, which was made optional by the Supreme Court.

In total, mathematician Carter Price and economist Christine Eibner find, the 14 states that rejected the expansion will wind up with 3.6 million more uninsured people, $8.4 billion less in federal funds, and up to $1 billion more in spending on uncompensated care in 2016.

But, but, but…FREEDOM!

I’ll add only this editorial aside:  the number that really counts there are the 3.6 million more uninsured.

Steen_Doctor_and_His_Patient

That’s a lot of human cost, suffering that should not happen.   That it comes at a significant dollar cost to the states that so choose to put their citizens in harm’s way is only icing on the cake.

Actually, I can’t resist one more bit of editorializing.  As I think about the in-your-face religiosity of a fair subset of those opposing Obamacare, I can’t help but think of what Albert Einstein said on being asked for his message to the German people in the second year of that conflict whose name should have retired the irony prize for all time, the “Great War”:

Honor your Master Jesus Christ not only in words and songs, but rather foremost by your deeds.

That is all.

Image:  Jan Steen, The Sick Woman, c. 1663-66

(PS:  I’m on the road with very sporadic internet for the next week+.  Given my highly sporadic approach to blogging, no one is likely to notice — but if you do, that’s why.)

Why Mitt Will Lose…Or Your Modern GOP In One Line Of Arithmetic

August 2, 2012

Ezra Klein sums up the entire GOP policy approach in one ‘graf:

The reason Romney’s plan doesn’t work is very simple. The size of the tax cut he’s proposing for the rich is larger than all of the tax expenditures that go to the rich put together. As such, it is mathematically impossible for him to keep his promise to make sure the top one percent keeps paying the same or more. [bold in the original]

You can’t get simpler than that.  Mitt Romney wants to cut his taxes so much that he has only two choices left for the rest of his budget:  raise taxes on everyone else and/or allow the deficit to balloon.

I know.  Facts have a liberal bias, and numbers are f**king commies.  This is the GOP reality folks; now we get to decide if we choose to live within it.

Not much else needs saying, really, and I see that the Obama campaign is already on this one like barnacles on Romney’s yacht.  Do read the rest of Klein’s post, by the way.  It lays out the full failure of the whole Romney tax fiasco with admirable clarity. (h/t GOS)

Image:  Paul Klee, Red Balloon, 1922

You Don’t Need A Weatherman…

October 13, 2011

…to tell which which way the wind blows.  Not when even Marty Feldstein marches in with a more aggressive mortgage forgiveness plan than we’ve seen out of either Congress or the administration.

I don’t love the plan as offered, to the extent that an 800 word op-ed. offers much in the way of a fine-grained proposal.  Feldstein, Ronald Reagan’s head of the Council of Economic Advisors, calls for forgiving out-of-the-money mortgages down to 110% of the homes’ value — a threshold that would touch 11 million out of the 15 million  homes in the United States.  Lenders would absorb half the loss and the government would cover the other half, at a cost Feldstein asserts would be less than $350 billion.

I don’t have much to say about that part of the plan.  Why 110%?  Is there any data that suggests that’s the number to encourage underwater mortgagees to stick with the loan?

Or…how much of the current foreclosure crisis is driven by unemployment, and hence at this moment is unlikely to be touched by a payment reduction that still leaves the house underwater?

No clue, here (and no expertise to justify a guess), but these are empirical questions that could be answered…and in any event Feldstein — now at Harvard — is at least trying to come to grips with that insane number of 15 million houses that embody enormous financial loss.

The part of the this proposal that I think is almost certainly a bad deal is the price homeowners would pay to get their mortgage reduction:  Feldstein would transform these loans from non-recourse status —  in which the lender can claim the collateral, the house, but no other assets if the borrower defaults — into an instrument that puts all the borrowers assets are at risk.  To me, taking financially vulnerable people in the midst of  a bad economy and placing them at still greater economic risk seems to me both cruel and stupid.

Much better, in my view, are the proposals that place the government — the taxpayer, you and me, baby — into financial partnership with both the borrower and lender.  In these approaches, the borrower who gets mortgage relief has to share with the lender (and/or the Feds) any gain made from an ultimate sale of the property.  Everybody’s incentives align, and the borrower is not one layoff away from utter ruin, as he or she would be in the Feldstein scheme.

But what really stood out for me is not that Feldstein has come up with the least middle-class-friendly version of mortgage relief out there — that’s how he rolls — but that even such an old Reagan hand has driven to the core of the matter:

…As costly as it will be to permanently write down mortgages, it will be even costlier to do nothing and run the risk of another recession.

Yup, Dorothy, we’re not in Kansas anymore — or perhaps, pace  Thomas Frank, even in Kansas they’ve starting to grasp the most brutish of brute fact.

Yes, it sucks that the taxpayer must bail out over-extended borrowers and the reckless (criminal) financial institutions that placed those loans.  But life does blow sometimes — as most actual grown-ups understand.  Increasingly, those able to recognize the difference between ought and is accept that it’s better to deal with that fact than to watch the entire fiscal structure of our economy swirl down the toilet of whinging infant Congressional Republican orthodoxy.

Feldstein concludes by restating that same message.  Better the nation take its medicine than seek to extract the pleasure of righteousness amidst the rubble:

I cannot agree with those who say we should just let house prices continue to fall until they stop by themselves. Although some forest fires are allowed to burn out naturally, no one lets those fires continue to burn when they threaten residential neighborhoods. The fall in house prices is not just a decline in wealth but a decline that depresses consumer spending, making the economy weaker and the loss of jobs much greater. We all have a stake in preventing that.

That’s DFH talk, of course.  Without quite saying it out loud Feldstein here offers the suggestion that society has both values and obligations that trump the every-man-a-wolf-to-his-fellow-man cult of the individual that passes for  contemporary GOP “thought” on the social compact.

When you’ve lost Marty…

Image:  John Constable, The Hay Wain, 1821

Deutschland Uber…if not Alles, Then Us

June 7, 2011

David Leonhardt is sounding mighty shrill these days:

After performing worse than the American economy for years, the Germany economy has grown faster since the middle of last decade. (It did better than our economy before the crisis and has endured the crisis about equally). Just as important, most Germans have fared much better than most Americans, because the bounty of their growth has not been concentrated among a small slice of the affluent…

…Unlike what happened here, German laws and regulators have also prevented the decimation of their labor unions. The clout of German unions, at individual companies and in the political system, is one reason the middle class there has fared decently in recent decades. In fact, middle-class pay has risen at roughly the same rate as top incomes.

The top 1 percent of German households earns about 11 percent of all income, virtually unchanged relative to 1970, according to recent estimates. In the United States, the top 1 percent makes more than 20 percent of all income, up from 9 percent in 1970. That’s right: only 40 years ago, Germany was more unequal than this country.

Read the whole piece. Leonhardt points to German benefit reforms that he thinks we should pay attention to, and to the role of government in creating the conditions for economic and social success.

How about the United States?  Well, Leonhardt tries to paint a optimistic picture at the end of his column, but this penultimate thought kind of dashes any foolish hopes:

And us? Well, lobbyists for the mortgage bankers and the N.A.A.C.P. have recently started pushing for less stringent standards for down payments. Wall Street is trying to water down other financial regulation, too.

Some Democrats say Social Security and Medicare must remain unchanged. Most Republicans refuse to consider returning tax rates even to their 1990s levels. Republican leaders also want to make deep cuts in the sort of antipoverty programs that have helped Germany withstand the recession even in the absence of big new stimulus legislation.

Some days, it seems like the only thing to do is stock up on canned goods.  But I’ve got a kid, and I just can’t quite bring myself to abandon all hope. This bit of Leonhardt’s message does stick:  if the Germans can do it, we can’t be wholly without a chance.

Right?

Image:  Rembrandt van Rijn, The Sampling Officials, 1662.

Just a Wee Bit of McArdle Snark to Keep My Hand In: She’s Still Always Wrong, but Makes a (Sad) Funny Nonetheless, Krugman, Ryan and Judt edition

August 8, 2010

I’m off on a two week holiday to a secure undisclosed location that is blessed by no landline phone; no cell phone coverage; no town electricity or cable (and hence no internet).

Bliss, in other words.

I may be able to launch a minor blog post or two, but if not, I thought I’d wave au revoir with this little thought.  Prompted by a commenter over at Nate Silver’s place on Paul Krugman’s brutal and efficient takedown on Paul Ryan’s fantasies, (check out the Krugman blog for more) I did a stoopid — I looked in on what was happening over where She-Who-Ws-Always-Wrong informs (sic?–ed.) her following.

Predictably, she attempts a combination of more-in-sorrow-than-in-anger and petulant disdain in what amounts to an assertion that the Atlantic’s Business and Economics Editor, complete with her MBA, understands economics and tax policy better than someone with this CV.*

Well, maybe so; I’m not big on the argument from authority, and I suppose that were McArdle a quantum object, one could come up with a Feynman diagram that would allow us to calculate the probability that McArdle would in fact best Krugman in any substantive argument (that did not extend to exotic salt, of course).**

But because I’m really trying to leave this post with just one macabre visual gag, I’ll limit my snort of ridicule here to noting that in two longish posts (sure you want throw that stone, sinner? — ed.) she fails to grapple with the core of Krugman’s critique of Ryan.

That is:  the issue is not whether the CBO or the JCT was or was not asked, or should or should not have run the calculation on the revenue side of Ryan’s safety-net eviscerating and tax cut fantasies.***

What really matters is, who is right?  Does Ryan’s plan raise taxes on the poor and middle class, while cutting them on the rich, then slashing services of most importance to the poor and them middle, while still leaving the deficit in much worse shape than the status quo?

Yes it does. The only independent analysis to assess both revenue and spending cuts says it does, and Krugman, as you would expect from someone who’s actually accomplished this and that in the world, reports that fact correctly.****

So, though McArdle is deeply offended at the suggestion that someone who manages to obscure what his plan will cost in his discussions of that work in public is somehow misleading that public, I don’t have much sympathy for those who who think that calling a fraud a fraud is somehow not the thing to do over a table bedecked with pink Himalayan salt (you just can’t let that go, can you?…ed.) (No–TL).

‘And of course, the significant fact, the only one that matters, is that Ryan proposes a radical redistribution of wealth upwards, in the context of further shredding the social safety net while speeding the nation’s plunge into bankruptcy.

Until he, or his seemingly innumerate defenders***** can come up with a convincing demonstration that the Tax Policy Center’s analysis has got all that wrong, then Krugman’s conclusions as to both Ryan’s character and the impact of his policy proposals stand.

But you knew all that.

Which brings me to the snark.

I haven’t blogged on one topic I really think I should have.  I’ll may yet get to it — I hope I do.  But I don’t want to let pass the death of Tony Judt at this moment.  This is a tremendous loss.  I wish I’d had the chance to learn from him directly, rather than through his formidably researched, elegantly written and annoyingly prolific writing.

I do want to write at least a little more than that — but here what amounts to a kind of valedictory — the last two paragraphs from Judt’s most recent article in The New York Review of Books — will do to be going on with.  I read them as Judt’s deceptively simple elegy in which he captures worlds of historical and social insight:

Universities are elitist: they are about selecting the most able cohort of a generation and educating them to their ability—breaking open the elite and making it consistently anew. Equality of opportunity and equality of outcome are not the same thing. A society divided by wealth and inheritance cannot redress this injustice by camouflaging it in educational institutions—by denying distinctions of ability or by restricting selective opportunity—while favoring a steadily widening income gap in the name of the free market. This is mere cant and hypocrisy.

In my generation we thought of ourselves as both radical and members of an elite. If this sounds incoherent, it is the incoherence of a certain liberal descent that we intuitively imbibed over the course of our college years. It is the incoherence of the patrician Keynes establishing the Royal Ballet and the Arts Council for the greater good of everyone, but ensuring that they were run by the cognoscenti. It is the incoherence of meritocracy: giving everyone a chance and then privileging the talented. It was the incoherence of my King’s and I was fortunate to have experienced it.

Just enjoy those sentences for their rhythm, their swing.  Then think about their meaning…

…and then consider this statement by Ms. McArdle on Judt: “Obviously, we were not politically sympatico, but I nevertheless had enormous respect for the man’s writing; at his worst, he was a mighty foe.”

When we snarkazoids sometimes talk about McArdle’s leaden, ponderous, unlovely prose, this is the kind of stuff we’re thinking about.    But let that pass, and focus on what she’s actually trying to say here.

I was gobsmacked, I have to admit, and then, for all the sadness of the moment, and the genuine awfulness of the way death took Judt, I couldn’t stop myself trying to imagine what might have happened in the unlikely event of Judt ever bothering to notice that McArdle might consider him a foe.

I found the answer — and do forgive me for the sudden turn of bathos here — from a Balloon Juice commenter writing on a completely different subject.  That writer led me to this truly evil and socially unredeemable clip…and you can fill in the rest.

That is all — see you in a fortnight.

*Which, you will note, describes an individual who somehow hasn’t managed to update the document with this news.

**And yes, I know.  This kind of appropriations of physics jargon is fraught, to put it kindly.  But I have no intention of heading towards Dancing Wu Li territory, and it’s my blog, and it’s late, so take it up with the management if you don’t like it.

***Though the verdict seems clear here…McArdle interprets Ryan’s exchange with the Joint Committee on Taxation as a rejection of Ryan’s request:  “the answer to Paul Krugman’s question “Why didn’t he ask” is that “He did, and they said no.”  The record shows that the JCT offered only a ten year projection, and Ryan refused that, preferring instead to assert the assumption that net revenue would remain unchanged.  So what actually happened is that the JCT wouldn’t answer the question the way Ryan wanted it handled, and so he simply set the dials himself and moved on.

McArdle notes that she wrote to two Ryan staffers asking if the problem was other than what Ryan has publicly stated it was — the limit to a ten year projection. (Here’s Ryan in his reply to Krugman’s latest column: “However, CBO declined to do a revenue analysis of the tax plan, citing that it did not want to infringe on the traditional jurisdiction of the JCT. JCT, however, does not have the capability at this time to provide longer-term revenue estimates (i.e. beyond 10 years) [Krugman’s emphasis].” She reports, and I have no reason to doubt her, that the staffers agreed with her suggestion that it was mere lack of staff time, and not deliberate deceit that led Ryan to omit an actual analysis of the revenue side of his plan.

Unfortunately, McArdle, not actually being a journalist, doesn’t get why this is not dispositive, even ignoring the fact that Ryan and her unnamed sources do not have their stories straight.  I’ll leave to the reader to figure out the several problems she (fails to) confront in her attempt to identify and assert fact.

****Here’s most of the a summary of the full report (pdf):

TPC found Ryan’s plan generates much less revenue than he projects. If all taxpayers chose the simplified system, it would produce about 16.8 percent of GDP by 2020, far below the 18.6 percent he figures for that year. If taxpayers chose the system most favorable to their situation, the Ryan plan would produce even less revenue—about 16.6 percent of GDP.

What does that mean in dollars? CBO’s most realistic projection of revenues (assuming  most Bush tax cuts are extended and many middle-class families continue to be exempted from the Alternative Minimum Tax)  figures the existing tax system would raise about $4.2 trillion in 2020. By contrast, Ryan’s plan would generate about $3.7 trillion, or $500 billion less in that year alone.

While TPC didn’t model the Ryan plan beyond 2020, the pattern of revenues it generates suggests it would be decades before it reaches his goal of 19 percent of GDP—very likely sometime after 2040.

Top-bracket taxpayers would overwhelmingly benefit from Ryan’s tax cuts. By 2014 people making in excess of $1 million-a-year would enjoy an average tax cut of more than $600,000. To put it another way, their after-tax income would rise by nearly 30 percent.

By contrast, the average taxpayer making $75,000 or less would pay higher taxes if they  chose Ryan’s two-rate alternative. If they chose the tax plan more favorable to them, they’d do a bit better. For instance, people making between $50,000 and $75,000 would typically get a tax cut of $157 in 2014, while those making between $40,000 and $50,000 would pay $128 more on average.

These estimates are subject to lots of uncertainty. For instance, we assumed Ryan’s 8.5 percent VAT—the new business tax—would generate about 4.3 percent of GDP in revenues. TPC’s Joe Rosenberg, who modeled the Ryan plan, believes that estimate is generous. But since no such tax currently exists, it is hard to know for sure.

One other caveat: TPC did not assume that taxpayers would change their behavior in response to this new tax structure. We know they would, of course, in some ways that would generate additional revenue and in others that would lose revenue. But because these changes are so uncertain, TPC did not include them in our revenue estimates.

*****And no, Mr. Suderman, trying to throw dust into folks’ eyes with talk of the TPC’s liberal bias does not actually constitute a meaningful argument about the numbers they report. But you knew that.

Image:  Guy Pène du Bois,  “The Confidence Man” c. 1919.

DFH’s are not alone: Some video on the madness of current defense spending

April 6, 2010

Benjamin Friedman is no one’s idea of a wild-eyed hippie naif.

He is, rather, a Ph.D candidate at MIT’s Political Science Department and a research fellow at that well known bastion of tie-dye and patchouli, the Cato Institute.

Money fact: as Friedman totes up current defense spending  including all the bits up to the share of interest on the debt that can be attributed to deficit spending on the military, he finds that we get almost no change out of a trillion dollars each year. (Contrast that with estimates of the cost of health care reform that come in at about 940 billion over ten years, and is projected to reduce the deficit over that period.)

The edited version of Friedman’s is 23 minutes long, and there is no requirement that you agree with the whole analysis.

(I think he dismisses security interests in Asia a bit cavalierly, myself — not in that I disagree that it’s odd we still have major bases and commitments in Japan, but that it seems to me a more difficult process to extract from that north Asian series of commitments than it would be to do so from a Europe that no longer divides along the inner-German border.)

But that said, Friedman makes a coherent and to-me pretty obvious argument that we are spending way too much on the military.  He offers a good story as to why — where the different pressures to maintain that cost trajectory.  (If ever there was a case for “bending the curve” it comes here.)*He also came up with a pithy answer as to why that’s unlikely to change anytime soon. Money quote, from political scientist Ronald Dahl:

“In a dictatorship, a minority rules. In a democracy, minorities rule.”

*One note:  Friedman points to an increase in the expansion of benefits and the cost of health care for active duty members of the armed services and for retirees as one of the (smaller, I think) drivers of military budget growth over the last decade.  He doesn’t separate out the specific cost of care attributable to the wars.  But the point is, of course, that getting medical care cost under control is as many have noted, a national security issue as well as a moral and social one.

more about “DFH’s are not alone: Some video on t…“, posted with vodpod

Call Your Senators…

January 28, 2010

Per this post here and that post there.

Here’s a link to the phone number for every Democratic Sen.  You know what to do.

Image:  John Leach, “Fabianus offers peace or war to the Carthaginian Senate,” from A Comic History of Rome, c. 1850.


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