Category Archives: Economics

Yes, Is A Disaster. No, Obamacare Isn’t Screwed. Yet. User Experience, after Andreas Vesalius

Having absolutely no knowledge about what it takes to fix a huge piece of software like (the online database for the Affordable Care Act – or Obamacare), I’ve been able to make my way through the mudslide of confusing reports and critiques regarding the website’s disastrous operation. Much to my own surprise, I’ve come to a dual (provisional) conclusion: either in a few weeks time, the website will be working like the Obama administration is claiming (hoping, praying) it will, and everyone will move on and forget this disaster ever happened. Or, it won’t, and Obamacare will be totally screwed.

Suffice it to say, there’s very little middle ground here. That being said, I’m still taking all of the disaster-reports coming from numerous insiders and journalists with a grain of salt. The fact is, very few people know exactly what’s wrong with the system, and being on the outside of that circle (like all of us are), I tend to air on the side that we shouldn’t purport to know more than we do, or speculate to that fact.

What must be noted, however, is that none of this should have come as a surprise to the Obama Administration. Staffers at HHS were warning about the system’s inadequacies long before the October 1 rollout. As reported by Lena Sun and Scott Wilson:

Days before the launch of President Obama’s online health ­insurance marketplace, government officials and contractors tested a key part of the Web site to see whether it could handle tens of thousands of consumers at the same time. It crashed after a simulation in which just a few hundred people tried to log on simultaneously.

The good news – relatively speaking – is that the Obama administration is well aware that the online portal of is a complete disaster. Whether or not they’ll be able to fix it before this thing capsizes is the question.

Photo: Mike Licht


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These Quotes Should Really Worry You About The Debt Ceiling

House Speaker John Boehner

Let’s start with this doozy from freshman GOP Rep. Ted Yoho over the weekend: “I think we need to have that moment where we realize [we’re] going broke. If the debt ceiling isn’t raised, that will sure as heck be a moment. I think, personally, it would bring stability to the world markets.

Oh good, now we have a Congressman who actually believes that breaching the debt ceiling will bring “stability to world markets”. Because nothing says stability and confidence quite like defaulting on one’s debts and obligations.

These next two quotes can work in tandem, but only because they come from mutually exclusive positions:

House Speaker John Boehner on [not] raising the debt ceiling: “We are not going to pass a ‘clean’ debt-limit increase.”

And from the White House we have Treasury Secretary Jack Lew: “[Republicans] need to open the government. They need to fund our ability to pay our bills. And then we’re open to negotiation.”

So we have The White House refusing to sign anything but a clean increase in the debt-ceiling, and Boehner signalling his party’s intent to refuse to pass a clean increase in the debt-ceiling.

Compounded by the fact that Rep. Yoho is not the only member of his party to actually believe that defaulting on the debt-ceiling is a good thing — and good for the economy!! — and you start to wonder if these people can figure this out in the next 10 days. Probably not.

Photo: Medill DC

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Republicans Ready Themselves For Self-Destruction

Rep. John Boehner

According to Robert Costa over at the National Review, the Republican leadership has given up: Boehner will allow the lunatic tea-party bandits in the House to move a resolution to keep funding the government, save for Obamacare. And, once that falls apart in the Democratically controlled Senate, and the next step is a government shutdown, the Republican leadership will try/pray/hope/beg/borrow/steal enough votes from their party in order to keep the government open. If you’re looking for an apt word to summarise this, might I suggest “stupidity”.

From Costa:

Here’s how my sources expect the gambit to unfold: The House passes a “defund CR,” throws it to the Senate, and waits to see what Senator Ted Cruz and his allies can do. Maybe they can get it through, maybe they can’t. Boehner and Cantor will be supportive, and conservative activists will rally.

But if Cruz and company can’t round up the votes, the House leadership will likely ask Republicans to turn their focus to the debt limit, avoid a shutdown, and pass a revised CR — one that doesn’t defund Obamacare.

The really mind-boggling truth to all this is that everyone knows what the deal is here: the bill will survive the House and Tea partiers who have done a really amazing job convincing stupid people that Obamacare is a bad thing will have a day of celebration. Then Harry Reid will light the stupid bill on fire and toss it in the trash in the Senate. In the end, we’ll be right back where we started, only that much closer to a government shutdown.

And unless the Republican leadership — which has pretty much lost all leverage and control over the party — can convince the loons of the far-right to relent and pass a funding bill, the government will indeed shutdown. The silver-lining? If-and-when that happens, only one party will be to blame.

(Photo: Medill DC)

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Spain’s Tax On The Sun Reveals Dilemma Of Prioritization Under Debt


By Mnemosyne:

Despite having the ninth largest external debt in the world, Spain’s capacity for solar energy ranks as one of the highest, often receiving a nod of approval by environmentally concerned critics. But the onset of the debt crisis in 2008 resulted in difficulties with carrying out the government’s subsidy program for the panels, as well as a decreased demand for energy.

With debt continually growing, some estimating by nearly 26 billion euros, that decrease in demand has only persisted, if not worsened. Spain’s generation of solar power is now estimated to be 60% greater than any demand. Industry Minister Jose Manuel Soria defends the proposal to fine private users up to €30 million if their solar panels are not hooked to the national grid in order to be taxed and measured by claiming that these users benefit from having a back-up power system from the grid.

“The decree is an attack to market freedom that aims to prevent people from competing with established utilities,” Jose Donoso, managing director of Spain’s solar lobby group UNEF, said in an interview. “It’s like if they charged you when you turn off electric heaters and use a wood stove.”

Initial subsidizing of the solar industry incentivized individuals to pursue environmentally friendly means of self-generated energy. Opponents, however, argue that implementation would make self-generated solar energy more expensive, thus pushing more people back into the arms of its electrical grid counterpart. Spain’s shift in being the forerunner for supporting a clean, natural source of energy, to eradicating economic incentives, depicts the prioritization shifts that nations under debt undergo.

Perhaps a few years down the line, once a larger number of people were incentivized to turn towards solar energy in Spain, it would be a more viable means of steady income. But to play the hand too early results in at least two losses for the state: less trends towards clean energy, and less income in the long run. As individuals switch to the cheaper electrical grid once more, Spain’s capacity to utilize it as an export diminishes.

Debt destroys a nation’s priorities. Spain joins a long list of states that have essentially shown how fiscal desperation can lead to bad policy. The kind that does as much damage to the environment as it does a nation’s long-term well-being.

(Photo: Marco Cevat)

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We Subsidize Religions To The Tune Of About $83.5 Billion A Year

Matthew Iglesias argues that it’s about time we start taxing churches:

Let’s tax churches! All of them, in a non-discriminatory way that doesn’t consider faith or creed or level of political engagement. There’s simply no good reason to be giving large tax subsidies to the Church of Scientology or the Diocese of San Diego or Temple Rodef Shalom in Virginia or the John Wesley African Methodist Episcopal Zion church around the corner from me. Whichever faith you think is the one true faith, it’s undeniable that the majority of this church-spending is going to support false doctrines. Under the circumstances, tax subsidies for religion are highly inefficient.

That led Dylan Matthews to investigate how much money we’re talking about. To do so, he cites a study done by Ryan T. Cragun, a sociologist at the University of Tampa, and two of his students, Stephanie Yeager and Desmond Vega, whose research appeared in Free Inquiry, a publication of the Council for Secular Humanism:

When people donate to religious groups, it’s tax-deductible. Churches don’t pay property taxes on their land or buildings. When they buy stuff, they don’t pay sales taxes. When they sell stuff at a profit, they don’t pay capital gains tax. If they spend less than they take in, they don’t pay corporate income taxes. Priests, ministers, rabbis and the like get “parsonage exemptions” that let them deduct mortgage payments, rent and other living expenses when they’re doing their income taxes. They also are the only group allowed to opt out of Social Security taxes (and benefits).

Cragun et al estimate the total subsidy at $71 billion. That’s almost certainly a lowball, as they didn’t estimate the cost of a number of subsidies, like local income and property tax exemptions, the sales tax exemption, and — most importantly — the charitable deduction for religious given.

The charitable deduction for all groups cost about $39 billion this year, according to the CBO, and given that 32 percent of those donations are to religious groups, getting rid of it just for them would raise about $12.5 billion. Add that in and you get a religious subsidy of about $83.5 billion.

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Bring Back Bankruptcy For Student Loans?

graduation caps

Prior to 1976, student loans were dischargeable in bankruptcy. Since then, the only way to get out from paying back your student loans — if you don’t have the money — is to default, or die. And even then, the debt remains.

The total student loan debt in this country stands at more than $1 trillion — that’s more than either auto loans or credit card debt. Spurned on by the fact that in the very near future, the country will be thrown into chaos because millions of young Americans will default on paying back exorbitantly high student loans, the Center for American Progress issued a new report, calling for a combination of reasonable standards for ensuring the repayment of student loans, backed by a carefully crafted bankruptcy option for those who realistically cannot meet their debt:

Congress should move to make some student loans dischargeable in bankruptcy. Given the persistent myth of the young borrower declaring bankruptcy at the start of his or her career, it is understandable that no one wants to be seen as opening the floodgates to potential abuse. The way to approach this issue, however, is to establish clear and public standards for what we at the Center for American Progress refer to as Qualified Student Loans, or loans that cannot be easily discharged in bankruptcy, which has been done for other types of financial products as a way to identify safer financial products. Qualified Student Loans would include loans, both federal and private, that have reasonable repayment conditions such as low interest rates and access to favorable forbearance, deferment, and income-based repayment options. These loans would also be qualified based on the successful track records of the institutions and programs receiving the proceeds as a way to ensure that these are programs that—by virtue of their graduate employment rates—give graduates a reasonable chance to repay. Loans not meeting both standards—borrower-friendly terms and some evidence that graduates, based on their employability, are likely going to be able to repay these loans—would be eligible for discharge in bankruptcy just as credit cards are. Other loans—Qualified Student Loans—would maintain the undue-hardship provision while at the same time benefiting from greater borrower protections.

Considering the amount of lobbyist influence that went into getting rid of student loan bankruptcy in 76′, I can only imagine the kind of onslaught the banks would unleash on members on Congress if this ever became a serious talking point. It probably never will, mind you. Very likely, we’ll get to a point in this country where we’re staring down the face of another recession, only this time, the ones most affected will be those who have not even begun to establish themselves.

But if President Obama is serious about helping defaulting college students and graduates, this is certainly the place to start.

(Photo: Flickr user John Walker)

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Australia’s $16.88 Minimum Wage Dwarfs U.S. At $7.25


Australia’s $16.88 an hour minimum wage rate is proof enough to many that increasing the amount workers make doesn’t stifle growth. In fact, Australia hasn’t had a recession in 2 decades. But as the chart above from Business Insider’s Matthew Boesler shows, Australia is not alone in offering a higher minimum wage than the United States ($7.25).

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Study Finds That The More Sex You Have, The More Money You Make


According to a new study from the Institute for the Study of Labor at the University of Bonn, if you’re getting laid, you’re probably getting paid too:

We estimate that there is a monotonic relationship between the frequency of sexual activity and wage returns, whilst the returns to sexual activity are higher for those between 26 and 50 years of age. In addition, heterosexuals’ sexual activity does not seem to provide higher or lower wage returns than that of homosexuals, but wages are higher for those health-impaired employees who are sexually active. Over-identification tests, robustness checks, falsification tests, as well as, decomposition analysis and sample selection modelling enhance the study’s strength. Contemporary social analysis suggests that health, cognitive and non-cognitive skills and personality are important factors that affect the wage level. Sexual activity may also be of interest to social scientists, since sexual activity is considered to be a barometer for health, quality of life, well-being and happiness.

Now, the study is limited to the Greek population in 2008, so I guess keep that in mind. But if the Greeks are — and there’s no reason they shouldn’t be — reflective of the rest of humankind, then the results do indeed correlate that sex and wages rise together. None of this means that if you just get laid more, you’ll make more — you still have to put in the work. But if you want to be happier — happiness leads to more productivity, and more productivity leads to more money — why not work on those old pick-up lines again?

Ahem .. hello, ladies.

(Photo: Via Wikicommons)

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Poll: Obama’s Economic Approval Rating Is … Bad.

Mirroring the drop in his overall approval rating, Gallup finds that only 35% of Americans approve of how the president is handling the economy:


One would except such low numbers during an economic recession or debt-ceiling fight, but the U.S. economy is actually growing again — though not as fast as we would have liked thanks to Republican led sequestration — and the state of the U.S. economy is miles better than anything we’re seeing in Europe right now, or any other developed country for that matter. But i’m not so idealistic to think that many Americans consider those things when they offer their thoughts on the economy. The public’s approval rating of Washington’s leaders is at an all-time low (less than 10%); it’s not surprising then that Obama, as the head of the Washington leadership, would be considered under the same level of disapproval. It’s undeserved, mind you, but that’s probably the reason for the low percentage nonetheless. As long as Republicans run the House, blocking every single piece of positive, pragmatic legislation, while also allowing the country to face a sequester that hampered growth and ballooned the deficit, Obama will never be able to execute his economic policy.

And look, as cretinous as the Republican platform sounds, they’re really just doing what they’re supposed to do. It’s obstructionism on crack, yeah, but the opposition party is supposed to be obstructionist. Do enough damage to the economy so Obama gets the blame; make sure people know that it’s because he can’t bridge the partisan divide; gerrymander the living hell out of white districts to make sure you dominate the white vote; and assure 2016 voters that psuedo-conservative economics is the way of the future.

But the U.S. economy is growing (slowly); the deficit is falling faster than we imagined; unemployment is … well … shitty, but getting better; and future prospects are looking good, assuming we don’t go backwards — or don’t go Republican.

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Here’s How Little The Public Knows About The Deficit

Nobel winning economist Paul Krugman wanted to know how much voters knew about the plunging federal deficit, so the good folks at Google put together a Consumer Survey to find out:


And here’s what it really looks like:


It’s not a Gallup Poll or anything, but I imagine if the survey was expanded to cover the whole of the country the results would either be really close, or a lot worse. Part of it has to do with misinformation, of course, but the other sad truth is that most Americans don’t know that much about public policy, and even less about the country’s economic status. When I post something about some weird Republican gaff by some nobody congressperson from some small state, the traffic is astounding. Posts like this, not so much.

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The Economy Of Low Expectations

From the Los Angeles Times:

A private report Wednesday from payroll firm Automatic Data Processing Inc. showed the private sector created 200,000 jobs in July, the most since December.

The federal government’s employment report for July, to be released Friday, is expected to show a gain of 185,000 net new jobs in non-farm payrolls last month.

With the unemployment rate forecast to tick down to 7.5%, enough positive data is piling up to allow Fed officials to decide next month to begin reducing the central bank’s monthly purchases of $85 billion in bonds.

The good news is that the unemployment rate is decreasing; the bad news is that it’s decreasing because people are leaving the workforce — not because people are getting jobs. This Center on Budget and Policy Priorities chart tells the story:


On the left we see the yellow line showing the official unemployment rate since 08′. In 5 years, it’s dropped from 10 percent to under 8. So, yay. But on the right we have the more important red line showing the actual employment rate — or more simply, the percentage of people with jobs. That line has barely moved.

What it tells us is that the unemployment rate is down because people have left the unemployed ranks — not because they’ve gotten jobs, but because they left the workforce altogether. Some of that is the natural consequence of an aging population, but a lot of it is the basic truth that the economy is a heck of a lot worse than the unemployment rate suggests.

And the news out of Commerce yesterday did little to make me feel better about it:

The Commerce Department reported Wednesday that the economy expanded at a 1.7% annual rate in the second quarter, exceeding analyst expectations of about 1% growth.

Although still weak, the pace of growth from April through June showed that the economy is weathering this year’s tax increases and federal spending cuts.

The 1.7% growth rate was a significant improvement over the 1.1% rate in the first quarter, which was revised down from an earlier 1.8% estimate.

So, I guess if you keep your expectations to a bare minimum, we’re making progress. Look, the economy would be faring much better — theoretically — if sequestration didn’t take place (call your local Republican legislator and thank them), but it’s still a terrible mess. The sooner we realize that a lower unemployment rate doesn’t mean we’re out of the boondocks, the better.

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Hawaii to Offer Its Homeless Population One-Way Tickets Back to the Mainland

Homeless asian man on the sidewalk

Hawaii is known for clichéd luaus, world renowned beaches, unoriginal weddings, picturesque landscapes, and also for having the highest rate of homelessness in the country. Want to guess which one of those things they’d like to be rid of?

Some states tackle homelessness by enacting more shelters, others offer counseling services or tax credits for the working poor, but few do what Hawaii lawmakers just did: offer the homeless one-way tickets out of dodge:

Hawaii lawmakers hope to save taxpayers millions of dollars in welfare costs by shipping some of the state’s estimated 17,000 homeless back to their families on the mainland.

It’s a controversial idea. Critics point to potential abuse of the program and view it as a Band-Aid approach to a deeply rooted problem.

But supporters see it as a win-win; the homeless get a fresh start in a supportive environment and the state can focus its limited funding on local residents.

After years of trying to institute a return-to-home program, legislators were finally able to squeak a bill through this past session to do a three-year trial run. Although the legal language is now in place to set it up, there’s not much money to maintain it and the Department of Human Services, which would run the program, has serious concerns.

The “return-to-home” program has only been appropriated $100,000 over the next two years, mainly in order to gauge the success of the initiative before more funds are allocated.

On the one hand, if a homeless person in Hawaii does have family and better job prospects on the mainland, then offering free flights away from the island could go a long way to improving livelihoods. But let’s be real here: Hawaii wants to get rid of as many homeless people as possible because it’s way cheaper than erecting shelters and offering programs. And also, homeless people smell. It’s a cynical view, sure, but it’s glaringly obvious.

As for the impending abuse of the program:

In order to get a free one-way ticket, a person must be participating in the program for the first time and swear he or she is doing so voluntarily. The problem is that in many cities that have implemented similar programs, like New York, San Francisco, and Baton Rouge, “voluntary” doesn’t always mean voluntary, particularly when a city’s police department gets involved. When a homeless person has a run-in with the law, they are often presented with a choice: go to jail or “volunteer” for a one-way ticket. In addition, there is little verification that the person using the one-way ticket will have any better opportunity at their destination, because at that point Hawaii has shed its responsibility for providing care and services.

(photo by daveynin)

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Republicans Reject Obama’s “Grand Bargain” Tax Proposal Sight Unseen

President Obama Visits Ellicott Dredges on Jobs Tour

President Obama is set to unveil a new plan at an Amazon factory in Chattanooga, Tennessee, aimed at breaking the fiscal stalemate that has consumed Washington ever since he first took office. The proposals are modest: cut corporate tax rates and in return spend more on the president’s job program(s). Infrastructure spending being as dismal as it is, revamping the corporate tax rate as a short-term plan is as non-controversial as it gets — especially for a Congress that has not passed a jobs plan since 2009.

And we don’t really have the specifics of the plan yet, nor do I think we’ll get them during Obama’s speech in Tenn. But specifics be damned, because like every single policy measure this president has sought to implement (good, bad or necessary), it’s D.O.A — dead on arrival — when it comes before Republicans.

Let’s recap. There’s a proposal coming; it’s modest; it’s unspecific; it’s probably necessary given the state of this country’s infrastructure; it’s dead on arrival. Republicans won’t even wait until they hear the proposal before they kill it.

Welcome to American politics.

(photo by MarylandGovPics)

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Obamacare Works Very Well When State Officials Want It To

Obamacare on the steps of the Supreme Court

The emerging pattern is simple: states that aren’t soliciting bids for next year’s healthcare exchanges will have higher premiums than states that do. Via Steve Benen:

In recent weeks, there’s been a proxy war of sorts when it comes to the projected rates on health care premiums. A “blue” state like New York will announce great news, which leads a “red” state like Indiana to announce poor news. Democratic officials in California say residents are going to going to have more money in their pockets thanks to the Affordable Care Act, to which Republican officials in Ohio say the opposite.

The pattern isn’t exactly subtle: if you live in a state where officials want “Obamacare” to work, the law looks great. If you live in a state where officials are actively trying to undermine the law, regardless of what it does to you, your premiums, and your family’s access to quality and affordable care, then — you guessed it — the news isn’t as encouraging.

That said, the emerging pattern nevertheless suggests folks in states like Maryland, New York, California, and other bluer-than-blue states are going to be immediately happier with the results of the federal health care law because they’re living in states where officials actually want the system to work effectively.

My question is, what happens in those red states when residents start looking across borders and they wonder to themselves, “Why aren’t my benefits as great as theirs?” In theory, this should prompt those folks to start asking their state officials to do more of what works.

All signs point to the pattern continuing, but it’ll be interesting to see what the final numbers look like. If the law is effective, I can’t see how this ends any other way than the whole country benefitting from lower healthcare costs, despite the best efforts of Republican politicians and their super-lobby of healthcare insurance corporations. Red-state constituents will eventually see that their blue-state counterparts are paying less, and will demand the same.

(photo by flickr user Will O’Neill)

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The Case For Constitutional Monarchies

Dylan Matthews sticks up for Her Majesty The Queen:

Constitutional monarchy is the best form of government that humanity has yet tried. It has yielded rich, healthy nations whose regime transitions are almost always due to elections and whose heads of state are capable of being truly apolitical.

And like any good Wonk, his arguments are supported by charts like this one, reflecting GDP Per Capita (PPP) and Life Expectancy:


Constitutional monarchies have an average GDP per capita of $29,106.71 and an average life expectancy of 75.6. All other countries have an average GDP per capita of $12,518.76 and an average life expectancy of 68.3. Point: constitutional monarchies.

Of course, this doesn’t demonstrate that having a constitutional monarchy makes countries richer, only that it’s totally possible to both be a healthy, rich country and be a constitutional monarchy. The practice is hardly a “grotesque relic.”

And another reflecting democratic accountability:


“Only in constitutional monarchies — where governments have much broader discretion to decide their fates than in republics —are early elections more common as a mode of discretionary cabinet termination than nonelectoral replacement,” Schleiter and Morgan-Jones write. In other words, only constitutional monarchies force prime ministers to consult the people before shaking up their governments.

It’s an interesting argument, and to be sure the facts do show that constitutional monarchies do well, but on the other hand there are very few constitutional monarchies compared to other forms of government. Pound for pound, they do very well, but I’m not entirely convinced that they do well because they have a symbolic monarch to look up to — rather, it seems clear that these governments yield positive benefits because they’ve embraced the core tenants of liberalism and democracy.

The very notion of a monarch — one who is born and bred to be higher and mightier than all the rest — is as archaic as it is preposterous. America doesn’t have a royal family because America doesn’t need or want a royal family — and ever since it forced King George to his knees, it never has.

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