Come for the politics, stay for the snark.

The cruelty is the point; the law be damned.

And now I have baud making fun of me. this day can’t get worse.

It may be funny to you motherfucker, but it’s not funny to me.

Technically true, but collectively nonsense

Is it irresponsible to speculate? It is irresponsible not to.

Americans barely caring about Afghanistan is so last month.

The worst democrat is better than the best republican.

The party of Reagan has become the party of Putin.

This blog will pay for itself.

Hot air and ill-informed banter

We cannot abandon the truth and remain a free nation.

My years-long effort to drive family and friends away has really paid off this year.

They fucked up the fucking up of the fuckup!

Republicans in disarray!

Black Jesus loves a paper trail.

Anyone who bans teaching American history has no right to shape America’s future.

Putin must be throwing ketchup at the walls.

Optimism opens the door to great things.

… pundit janitors mopping up after the GOP

Let there be snark.

Speaking of republicans, is there a way for a political party to declare intellectual bankruptcy?

Putting aside our relentless self-interest because the moral imperative is crystal clear.

Let’s not be the monsters we hate.

The republican caucus is already covering themselves with something, and it’s not glory.

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Tax Policy

MPS on subsidies

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I think Kevin Drum is getting something wrong on healthcare subsidies and the economy in a liquidity trap:

 don’t have access to the full Goldman Sachs report, but I’m dubious about this for two reasons. First, Obamacare is roughly revenue neutral, which means federal subsidies are all paid for via tax revenue. Obamacare really shouldn’t have any first-order net stimulative effect on personal income or GDP. Second, although subsidies will reduce health insurance bills for people who were previously covered—thus freeing up income for other purposes—the individual mandate will force previously uncovered people to buy insurance they didn’t have before. This will reduce the income they have for other purposes.

Let’s think through the basic financing of Obamacare cash flows.  At its simplest, Obamacare transfers money from high income individuals to lower income individuals through the form of either subsidies for health insurance or Medicaid expansion payments.  The taxes that pay for Obamacare are primarily a surtax on high incomes via income taxes and an expansion of what is considered taxable income for OASDI-HI taxes.  Those taxes mainly hit people who are making more than $200,000 in MAGI.  There are a few other taxes (tanning, medical devices, reinsurance etc) that hit people at all income scales, but most of the new taxes are paid for by higher income individuals.

Subsidies are limited to family units making less than 400% Federal Poverty Line.  More subsidy dollars go to families who are poorer. Medicaid expansion dollars are limited to families making less than 138% FPL. 

Going back a few years, the CBO estimated the multiplier effects of various ARRA (stimulus) programs.

CBO multipliers
The key insight is that an economy that is operating significantly below potential, and where there is a significant class of people who are fundamentally tapped out of both ability to spend and ability to borrow, giving those people more money at the expense of taxing people who have unused capacity to spend and borrow should produce a significant burst of economic activity.  That is the basic financial transfer mechamism of PPACA — money goes to poorer people with a high marginal propensity to spend and it comes from people with a high marginal propensity to save. 

Does this analysis hold in all conditions. Hell no.  It holds when we’re stuck at the zero-bound and getting out of a massive debt overhang.  If we’re seeing an economy expanding like it is 1943, this analysis fails miserably, but we’re not seeing an amazing and unsustainable boom right now.

 

 

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Turbotax and PPACA help

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I just finished doing my tax return for the year.  There were two important things I noticed.  For the first time in my marriage, my wife and I don’t max out the student loan interest deduction.  That is a major win for us.

Secondly and more importantly, Turbotax was pushing the Exchanges reasonably hard.  There was a question on health insurance status for family members and then a decision tree if anyone was not covered.  This is important for two reasons.  First, it should continue to spread the word about how expansive the subsidies are for people on the Exchange as well as the expansion of Medicaid for people in expansion states.  A lot of people of small means don’t believe that they’ll get financial help in buying decent insurance.  Secondly, for the people who are aware that they need to do something about insurance, the tax refund is a usually the biggest lump sum distribution that people see in a year.  It is easier to buy a policy when the tax refund can pay for the first nine months of premiums.  I know my cousin who I’ve mentioned elsewhere on Balloon Juice was waiting for the refund to buy an Exchange policy.

The curves of procrastination don’t perfectly align.  The long term procrastinators for PPACA have until the end of March to enroll.  The procrastinators for filing have until April 15th to do something, so the reminders won’t line up perfectly, but this is useful.

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Surprisingly Not a Rip Off

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My daughter got her first W-2 last week, and she asked me to help her get her refunds. Her W-2 had a link to an IRS e-file site that was broken, so I helped her find myfreetaxes.com, which was recommended by the New York State Department of Revenue. Considering that it was funded by the Wal-Mart foundation and used H&R Block’s website, I figured there would be more than a few fucks thrown in. Nope – it is actually free for anyone making less than $58K/year. You can e-file state and local returns, and arrange for direct deposit of refunds. No hidden fees, no come-ons, just service.

This should be unremarkable, but of course it isn’t, given the marketing of “early refunds” (i.e., loans) and unnecessary tax advice to people who would get full refunds via a 1040EZ. It’s nice to see that there’s at least one place where hard-working people who have given Uncle Sugar a tax-free loan in the form of their withholding won’t get ripped off when they attempt to get their money back.

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Taking a Hatchet to healthcare (Pt. 3)

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The first two parts of this series have looked at the private market for health insurance and the government programs.  Medicare is essentially unchecked while Medicaid gets a whole lot stingier.  The private market is allowed to exclude and underwrite in some circumstances while the federal government backs away from a lot of regulation. 

The most fascinating part is the financing mechanism.  Obamacare expanded coverage through a combination of generous tax credits and Medicaid expansion.  The CBO scored that this expansion was paid for by a combination of cutting down on Medicare Advantage payments and a wide variety of taxes such as the medical device excise tax, the Cadillac plan tax, sun tanning tax, the reinsurance tax and income tax surcharges on high income individuals and families.  The Hatch plan repealed Obamacare and all the taxes (interestingly, it also repeals a major student loan reform package, no mention of what is supposed to replace that system) but it claims to be deficit neutral so it has to pay for its limited subsidies somehow.

And the way it does is a doozy that immediately shows how politically not viable this proposal is:

Section 601: Capping the Exclusion of An Employee’s Employer-Provided Health Coverage

our proposal caps the tax exclusion for employee’s health coverage at 65 percent of an average plan’s costs. The value of employer-sponsored health insurance would be capped and indexed to grow at an annual rate of CPI +1.

So what does that mean? 

My health insurance just got a whole lot more expensive for me.  That is the short story.  My health insurance according to box 12DD cost $13,000 last year to cover my entire family.  That is 100% pre-tax dollars.  This proposal would make some of that post-tax dollars.  If average means average family plan, the average was $16,351 in 2013.  65% of that means $10,600 would be tax deductible.  The remaining $5,800 for the average person in an average family plan would be taxable.   Personally, I would be paying taxes on an additional $2,400 worth of compensation.  Some people with expensive plans would be paying taxes on a new $7,000 or $10,000 compensation that they don’t see in cash.  Most people would be paying taxes on significantly larger chunks of previously untaxed compensation. 

Furthermore, in the out years, the value of the exclusion gets weaker as either the health plan stays within the budget constraint of CPI+1 by significantly paring back coverage, or the average health plan costs increase and all of those increases shift to taxed compensation.   Again, this fits with the basic Republcian diagnosis of the “problem” that Americans have it too easy and too good and don’t have to worry about bankruptcy every time they blow out their knee while looking for their cat. 

From a build the system from scratch perspective, this is not a bad idea.  However, we aren’t building a system from scratch.  We’re tweaking a legacy system.  And given previous decisions, this translates into a massive tax increase for anyone who gets decent coverage through work and in the long run much lower acturial value of work provided coverage.

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Good News, Everybody

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Good news, there is no need this year for the Independent Payment Advisory Board to meet. IPAB is an entity created by Obamacare that is designated to make payment reforms to Medicare to bring down the rate of Medicare spending inflation to the general rate of growth in the economy. Congress can overrule IPAB’s recommendations if they come up with a seperate plan that saves as much or more than IPAB’s plan. 

However IPAB is not needed when medical inflation for Medicare is beneath the rate of economic growth. And that is what is happening.

The White House brags:

Prices for personal consumption expenditures (PCE) on health care goods and services rose just 1.1 percent over the twelve months ending in May 2013, the slowest rate of increase in nearly 50 years. The slowdown in PCE health care inflation has been widespread…

Data from the Bureau of Labor Statistics’ Employer Costs for Employee Compensation survey indicate that for private sector employers offering health insurance, the annualized growth rate of real (inflation-adjusted) costs for workers’ health insurance has slowed from 2.2 percent a year from 2006:Q4 to 2009:Q4 to 1.8 percent a year from 2009:Q4 to 2012:Q4

What this means, if it is a sustainable trend, is systemically, health care is going from a red alert, going to destroy the federal budget, apple pie and day/night doubleheaders to a medium size problem that needs consistent monitoring, tinkering and experimentation. CBO is figuring federal Medicare/Medicaid committments in 2020 are $200 billion less than what they projected a few years ago. As the saying goes, a few hundred billion here, a few hundred billion there, and sooner or later we’re talking about real money.

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It isn’t going to moochers, it’s going to looters, but in the grand scheme of things, does it matter?

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Ohio’s Lieutenant governor, Mary Taylor- best known for lying about the health care law– has switched gears and is mounting a campaign to defend Kasich’s budget. She’s doing this because Kasich’s budget strips state funding from local public schools and other local public entities and services.

She’s doing it because Mary Taylor knows what I know: that there is strong and deep resentment about the state collecting money from here and then not sending any back here, and that resentment is huge in the rural conservative counties that Republicans count on to win elections. Now, this has always been something of a myth. Just as state conservatives bitch incessantly about federal spending but are first in line for federal subsidies, local conservatives bitch incessantly about state spending but are first in line for state subsidies. It didn’t matter that it wasn’t true. Local conservatives are convinced that most of the money collected by the state goes to black people in urban areas. They’re convinced of that because Republicans told them it was true over and over and over again.

Kasich’s problem is that the myth that conservatives relied on to drum up resentment and division- where state money collected in rural counties wasn’t coming back to rural counties- is now true, except Kasich isn’t sending any money to the (alleged!) moochers in “urban areas”, he’s giving it to wealthy people, privatizers of formerly public entities like public schools, and corporate welfare; the looters.

This isn’t a wealthy county. We depend on state subsidies. Not only do we depend on state subsidies, but local conservatives are of the opinion that they are the ONLY state residents who earned and therefore deserve these state subsidies. They’re not moochers OR looters. They “paid in” and now they are simply making a withdrawal before the moochers get their grubby paws on it and distribute it to ACORN and abortion-on-demand.

Taylor can spin all she wants, but my local public school has lost 1.6 million a year in state funding and people here support and send their kids to public schools whether they’re Republicans or Democrats. To people here, their school isn’t getting their “cut” of state money. Maybe it’s going to black people, maybe it’s simply disappearing into the maw of Big State Government, they don’t care. They’re down 1.6 million a year and Kasich is “giving them back” 9 dollars a year with a much-oversold income tax cut, while raising sales taxes

Since Kasich’s budget primarily and overwhelmingly benefits wealthy people, his donors in the rip-off public school privatization industry, and corporations who not only don’t want to pay taxes, but actually want to be paid by us for doing business in this state, local conservatives (who are overwhelmingly lower and middle class here) are mad that the money the state collects here isn’t coming back here.

So that’s why Mary Taylor has taken a brief break from lying about the health care law to spinning like a top on Kasich’s trickle-down budget.

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“Nothing wrong with being a tax and spend Republican!” is how I’ll greet her

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I wrote here about helping with a campaign to pass a public school bond issue.

This is a majority Republican town, and this is the first time I’ve worked with the same group of people we usually work against in elections. I think The Committee for the school levy is made up almost entirely of Republicans because the leader of the effort is an executive at a manufacturer here and he’s a Republican donor, voter and GOP Party person. His employer has given him as much company time on this as he needs because it’s a genuinely local company, they’re privately held and they believe the school issue is important to their ability to attract sales people and managers. The (now-retired) CEO of this company asked the school board to request an evaluation by the state public school facilities commission on the feasibility of renovating versus replacing our schools in 2009 and the state came back with all but the high school as “replace” so that drove their decision to head up a new school building campaign rather than a renovation.

We meet in the company conference room. It’s nice to have this big local employer behind something I support (for once) with all these fabulous resources. I could get used to it. I now understand the lure of wing nut welfare.

I’m finding that the Republicans involved in the campaign bring up the fact that I’m a Democrat a lot more than is strictly necessary. I’m not clear why this is. My sense is it’s to let me know that while we may be working together on this there will be no concessions as far as Conservative Principles. After they tell me I’m a Democrat they bring up the Kasich tax cuts. I think they keep hitting on this with me to let me know that while they’re for this particular tax increase, they’re still solidly in the “job creators get huge income tax cuts so as to grow the economy” camp. Their argument is that Kasich cut income taxes so therefore people should support increased property taxes for schools. It’s a wash!

I don’t agree with it as a practical matter and I also think it’s a lousy campaign tactic. This is a school district where 40% of the kids qualify for free or reduced lunch. Income tax isn’t a huge issue for the younger, lower income “sporadic voter” parents we need to reach if we want a winning turnout, although it’s clearly a huge issue for the Republicans on The Committee. The fact is Kasich’s income tax cut won’t benefit those families at all and Kasich increased sales taxes, so the parents I hope to reach will pay more taxes, not less. In addition, we have lost 1.6 million a year in state operating funding for our public school system under the Fox News personality-turned-governor. Despite my concerns, they’re in love with this “it’s a wash!” idea, so hopefully it flies with higher-income Republicans like them because they’re not budging.

Although I think their tax argument is dumb and based more on partisan fervor than facts or voter demographics or persuasiveness, I don’t hate all of their campaign ideas. One thing they’re saying that appeals to me is that the schools we use now were built beginning in 1917, someone paid for them, and it wasn’t the people who use the schools now. “It’s Our Turn” is the slogan.

One thing I hate about modern conservatism is what I see as the dead-beat, moocher nature of the Republican approach to replacing or maintaining public assets. I’m baffled by people who rely on a public asset like a public school (or park or swimming pool or road or library) yet seem to believe those things spring from the ground spontaneously the day they arrive and then disappear the moment they personally and individually no longer need a 2nd grade classroom or a walk in a park or a swim or a route to work or a library book. I like this slogan. Harkening back to citizens of yore is also a good approach because local history is a hobby here. The newspaper does a monthly feature with photos from the Olden Days and there is a section of the public library devoted to town history.

I asked for suggestions on the campaign in the last post and The Committee picked up one of the suggestions I made (given to me by a commenter here) that goes to the It’s Our Turn idea, and it’s this:

scav says:
August 9, 2013 at 12:23 pm
Is there anything interesting to be gained from looking into, publishing past efforts the community made into building schools? When was the first one built, how many since, old photos of ground-breakings, graduations, etc. Schools did provide built foci for communities etc and emphasizing that historical and ongoing effort might help with some people. Might pull one or a few short priming newspaper articles out of it. An effort, a commitment rooted in the past and builing toward the future, that sort of thing. Dick and Jane through the periods and generations?

It’s about to get weirder because I’ll be working on GOTV with the woman who was the local volunteer lead for Romney’s campaign. I meet with her next week. I know her (slightly) and she’s a bona fide wing nut, so we’ll see how that goes.

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