Tag Archives: money

Could The Shutdown/Debt Ceiling Cost Republicans The House?

Because the American people are a fickle bunch, the usual order of things is that the sitting President’s party loses seats in the House during the midterm election. Conventional wisdom would then lead one to accept the points expressed by The New Republic and Real Clear Politics in their estimation(s) that it’s unlikely Democrats will overturn the Republican majority in 12 months. The rule has exceptions, of course. Clinton’s Democrats actually picked up a few seats in 1998, following Speaker Newt Gingrich’s 21 day government shutdown.

It’s been reiterated quite exhaustingly that one of the main reasons Republicans have been able to keep the House despite losing the national popular vote to Democrats by 1.5% is that they enjoy the considerable majority of gerrymandered districts. In short, Democrats needed to win the House by a margin of more than 7% to become the majority party.

Fast forward to today. If this WaPo/ABC news poll is any indication (and I’d like to think it is), the country soundly puts the blame of the shutdown and the upcoming debt ceiling disaster on the shoulders of the GOP.

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But while public opinion of the GOP might be very low, commentators have rightly noted that President Obama garners considerable blame (deservedly or not) for the current Washington impasse. That may be true, but luckily for the President and his party, Obama is not running for re-election in the next 12 months. That point led Public Policy Polling to conduct a set of district-level polls meant for ascertaining Congressional preference — which has, in the past, tracked the national vote pretty closely. So, PPP set out to survey 24 congressional districts held by Republicans, and asked voters there to chose between their current Congressional representative and a Democrat. Here are their results, plotted against last year’s election result:

It’s important to note that we’re talking about surveys taken during a government shutdown explicitly engineered by Congressional Republicans, but the results show that Democrats swung 23 races (below the red line) while Republicans held one race (above the red line). If the results hold (and I don’t expect them to), Democrats will win the House. Comfortably.

I say I don’t expect this to last because, well, Americans have the tendency to forget about things like the shutdown when it comes time to vote. The midterm elections are still a long away off to where Republicans can successfully coerce their constituents to re-elect them to the House. I do expect Democrats to pick up some votes, which is not totally inconsequential since they’d be able to force the chamber to actually vote on resolutions that Boehner refuses to allow.

The survey doesn’t take into account how voters will feel about House Republicans if the Government hits the debt ceiling, but given the plausible disaster that would ensue if such a thing were allowed to happen, when compounded with the shutdown and the [still] terrible sequester, these results could hold true to the midterm, and possibly even increase.

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Quote For The Day: The Supreme Court Of Corporate America

Supreme Court Justice Antonin Scalia

“You follow this pro-corporate trend to its logical conclusion, and sooner or later you’ll end up with a Supreme Court that functions as a wholly owned subsidiary of big business.”

Elizabeth Warren, criticizing the U.S. Supreme Court as being too right-wing and pro-corporate. Full article can be read at Politico.

Can we just clone her already?

(Photo: flickr user Stephen Masker)

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

PS10

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

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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

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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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Quote for the Day: “Can Republicans Be Economic Populists?”

Ronald Reagan (Home Is Where The Story Begins) Tampico, IL

“The Republican postelection ideological repositioning project has chugged along fitfully and without satisfaction until just recently, when a solution struck with the blinding force of revelation. The concept is to define the Republican Party as the populist opposition to the Obama administration. Obama, goes this line of reasoning, is not the advocate of the people he puts himself forward as but the defender of bien-pensant elites. Republicans are — or should be — the party of stripping the elites of their government favors.”

(…)

“If you define privilege as “privilege meted out by government,” then, ergo, the Democratic Party is the party of privilege — the court party, the elites. There is certainly room to flay the GOP for its deviations — its farm bills, its business tax breaks — while ignoring both the main sources of economic and social privilege in America and disposition of the two parties toward it. But the right-wing populist analysis is still a magic trick, a way of transmuting the party that taxes the rich to provide health insurance to the sick and poor into the party of the rich and powerful. Far from the basis for a realistic program for the Republican Party, it’s merely a form of self-deception.”

Jonathan Chait, Can Republicans Be Economic Populists?

(photo by Wayne Wilkinson)

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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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Here’s Why Detroit Failed: Reactions and Analysis

Detroit, MI

Plumer lists some of the city’s major problems:

— Low tax revenue, in turn, means that city services are suffering. Detroit has the highest crime rate of any major city, and fewer than 10 percent of crimes get solved. The average response time for an emergency call is 58 minutes. Some 78,000 buildings are abandoned or blighted and there are an estimated 12,000 fires every year. About 40 percent of the city’s streetlights don’t work.

— High crime and blight are driving even more residents out of the city. It’s also driving down property values, which means many residents have stopped paying property taxes. The city collected about 68 percent of the property taxes owed in 2011. Both of those things put a further strain on Detroit’s finances.

— Detroit is sagging under decades of bad governance. “The city’s operations have become dysfunctional and wasteful after years of budgetary restrictions, mismanagement, crippling operational practices and, in some cases, indifference or corruption,” Orr wrote in May. “Outdated policies, work practices, procedures and systems must be improved consistent with best practices of 21st-century government.” (Detroit has been a one-party city run by Democrats since 1962.)

It’s obviously damning to any city to have crime be so pervasive, but I tend to think that when the economic opportunities are so amazingly scarce, crime and corruption become inevitable. Now, crime obviously does do all of the things Plumer notes: driving down property values while driving away investors and causing a sort of exodus from Detroit by the city’s population — but those are consequences of governance, I would argue. Detroit put all of their eggs in one basket — metaphorically. They thought investment in the auto-industry would save them, forgetting that a municipal city as large as Detroit needs more to offer to investors — and to itself, dependence wise — than one industry.

More on that later.

Yglesias investigates:

… the basic reason Detroit needs to do this is pretty simple. In 1950 there were 1.85 million people in Detroit. In 1970, it was 1.5 million. In 1990, it was a million flat. By 2010, it was down to 710,000. When your city is shrinking like that, you end up with a tax base that’s inadequate to maintain the fixed infrastructure or to pay off pension costs that were incurred in more prosperous times. Shedding legacy obligations is a necessary part of the fix. You can shed legacy obligations without filing for bankruptcy by just stiffing pensioners. But the scale of Detroit’s fiscal problems are so enormous that doing it entirely that way would be cruel and pointless—bondholders need to take a hit and this is the way to do it.

Matt is right, but that’s more “how” Detroit went bankrupt, as opposed to “why”. The “why” is simple — continued from before — and important: Detroit made the fatal mistake of offering only one invest-worthy industry to speak of, while ignoring the importance of basic economics which states that a city can only thrive when creativity, ingenuity and experimentation are greater emphasized. When a city creates an environment where multiple industries take root, investors with ideas will follow, creating a dynamic of mutual-benefit and competition. There’s also the fact when inventors live in the same city as one another, competition creates a dynamic where they are up to 6 times as likely to cite each others patents, and thus, create more of their own.

Detroit filed for bankruptcy for all the reasons Yglesias and Plumer note, but why they got there is that at some point, they decided to go all-in on the auto-industry. And by the time they realized that they made that mistake, crime went up, property values dropped, people left, corruption took root, taxes fell, debts rose, and in the end, Detroit failed.

Industry built the city, and industry can save the city. But Detroit has a long way to go before it can think of being saved.

(photo by flickr user JasonParis)

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Detroit Plans To File Bankruptcy Friday; Will Be Largest In History

Detroit

Even the dystopian future-Detroit depicted in “Robocop” never got this bad. The Detroit Free Press reports that the city is set to file for federal protection tomorrow, making it “the largest municipal bankruptcy in U.S. history”:

The filing would begin a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.

Detroit Emergency Manager Kevyn Orr, who in June released a plan to restructure the city’s debt and obligations that would leave many creditors with much less than they are owed, has warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection.

Gov. Rick Snyder would have to sign off on the filing. A spokeswoman did not immediately return telephone calls today.

Jefferson County, Ala., and Stockton, CA., have also filed for federal bankruptcy protection, and were — prior to Detroit — the largest municipal counties to do so. But with roughly 700,000 residents and nearly $20 billion in debts and liabilities, Detroit will undoubtedly set the benchmark for the way failed cities nationwide decide to take care of their financial woes.

UPDATE

Forget Friday, Detroit has officially filed for chapter 9 bankruptcy, making it the largest city in history to do so.

(photo by Laughlin Elkind)

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Say Hello To California’s Housing Boom

The real estate market around the country is still technically in recovery mode, but you wouldn’t know that if you looked at California — the sunshine state is in the midst of a “housing boom”:

The median home price in Southern California surged a stunning 28% in June compared with a year earlier — outpacing any month during last decade’s housing bubble. The gain puts the median at $385,000, up from $300,000 last June.

Some experts warn that prices, driven by short supply, should cool off soon. Investors who have flooded the region with cash purchases will probably retreat, they say, as a fresh supply of sellers and builders moves in. But others see nothing but higher prices ahead, with supply staying tight and buyers scrambling to close deals before the window of affordability slams shut.

Syd Leibovitch, founder and president of Rodeo Realty in Beverly Hills, said he expects prices to double from their bottom last year.

“You have a lot of room to run,” Leibovitch said. “Because historically, they always double in these cycles, and then they drop back a bit.”

Kevin Drum is a little pessimistic that it’ll last:

Plenty of the folks interviewed by the Times don’t think these prices are sustainable. My instinct says they’re right, but all it takes is another few months like June and we’ll be back in mega-bubble territory, just waiting for it to burst again and wreck the local economy. Good times.

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Tweet Of The Day

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Stiglitz On “How Intellectual Property Reinforces Inequality”

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In a really brilliant Op-Ed that’s worth reading several times over, Joseph Stiglitz castigates the effect of intellectual property battles on both foreign and domestic inequality, and argues that the SCOTUS case involving Myriad Genetics fully embodies three core themes found in his book “The Price of Inequality”:

“First, I argued that societal inequality was a result not just of the laws of economics, but also of how we shape the economy — through politics, including through almost every aspect of our legal system. Here, it’s our intellectual property regime that contributes needlessly to the gravest form of inequality. The right to life should not be contingent on the ability to pay.”
(…)
“The second is that some of the most iniquitous aspects of inequality creation within our economic system are a result of “rent-seeking”: profits, and inequality, generated by manipulating social or political conditions to get a larger share of the economic pie, rather than increasing the size of that pie. And the most iniquitous aspect of this wealth appropriation arises when the wealth that goes to the top comes at the expense of the bottom. Myriad’s efforts satisfied both these conditions: the profits the company gained from charging for its test added nothing to the size and dynamism of the economy, and simultaneously decreased the welfare of those who could not afford it.”
(…)
“Had that prior knowledge not been publicly available, Myriad could not have done what it did. And that’s the third major theme. I titled my book to emphasize that inequality is not just morally repugnant but also has material costs. When the legal regime governing intellectual property rights is designed poorly, it facilitates rent-seeking — and ours is poorly designed, though this and other recent Supreme Court decisions have led to one that is better than it otherwise would have been. And the result is that there is actually less innovation and more inequality.”

And since the U.S. has sought to impose its intellectual property regime on the rest of the world through bilateral and multilateral trade agreements, Stiglitz laments that the same public policy that is causing undue harm to American inequality, is in turn helping inequality to exacerbate worldwide:

“Economic power often speaks louder, though, than moral values; and in the many instances in which American corporate interests prevail in intellectual property rights, our policies help increase inequality abroad. In most countries, it’s much the same as in the United States: the lives of the poor are sacrificed at the altar of corporate profits. But even in those where, say, the government would provide a test like Myriad’s at affordable prices for all, there is a cost: when a government pays monopoly prices for a medical test, it takes money away that could be spent for other lifesaving health expenditures.”

(photo by Abhisit Vejjajjia

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Everything You Need To Know About Oregon’s “Pay It Forward” College Program

Oregon State University by air

Desperate times call for desperate measures, but sometimes desperation can lead to real legislative ingenuity. Oregon recently passed a bill that will afford students the ability to attend its state colleges for free if they agree to repay the state roughly 3 percent of their future earnings over an estimated 20 year period:

It began last fall in a class at Portland State University called “Student Debt: Economics, Policy and Advocacy,” taught by Barbara Dudley, a longtime political activist who teaches in the school of urban and public affairs, and Mary C. King, a professor of economics. Ms. Dudley was referred to John R. Burbank, executive director of the Economic Opportunity Institute, a liberal policy group based in Seattle, who had studied the no-tuition approach.

She, in turn, referred the students to him, and they adopted the idea as their group project for the semester.

The students and Ms. Dudley later made a presentation to state lawmakers, including state Representative Michael Dembrow, Democrat of Portland and chairman of the higher education committee. The Working Families Party of Oregon — of which Ms. Dudley was a co-founder — put the proposal at the top of its legislative agenda, and Mr. Dembrow and others ran with it.

Already, other states are taking notice, with Washington State, Vermont, NY, Penn and Wisconsin expressing interest in this “Pay it Forward” program.

Could this be the next step in financing college education? Would this alleviate the burgeoning and crippling state of student loan debt which threatens to cast the U.S. back into recession?

The program isn’t expected to kick in until 2015, but for the students currently taking out massive loans, or graduating with a mountain of debt and no job offers to speak of, its implementation can’t come soon enough. Expectedly, the program’s enforcement is getting a heck of a lot of resistance from Wall Street and Sallie Mae, who would effectively be cut out of the student loan business all together, assuming other states adopt this concept.

But the program is not without its share of faults, and one could/should expect some changes to be made before it goes into effect. Critics argue that it will unduly harm students with higher incomes after graduation, since it’s a flat tax of 3 percent. So a student with a more advanced degree earning $70,000 per year after college will have to repay more over a 20 year period than say a student graduating with a liberal arts degree pulling in $30,000 per year.

Also, the program is set to only cover tuition and fees, which usually accounts for less than half of the total cost necessary to attend college, meaning taking on student loans will still likely persist. And if students are expected to repay the school 3 percent of their earnings, universities may tighten their admissions standards based on future employability, thus having a negative impact on lower-income and/or minority students.

But even critics agree that the Oregon plan is a step in the right direction. It doesn’t eliminate debt, or student loan reliance, but it at least helps some students avoid over-burdening themselves in a job market which is less than stellar.

(photo by flickr user sami123)

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Step Aside Poland: The U.S. Is Ranked 28th In Health Care!

A new study in JAMA compares American health care outcomes with those in other rich, developed countries and finds that the United States basically sucks. Overall, the U.S. is in 28th place, trailing Chile and barely leading Poland. This chart shows where we stand, and also draws our attention to how we’re doing on things like diabetes (31st place), breast cancer (16th place), COPD (32nd place), and colon cancer (8th place):

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Oh and if that wasn’t bad enough, Aaron Carrol dissects the study and finds that we not only suck, we’re getting worse:

Between 1990 and 2010, among the 34 countries in the OECD, the US dropped from 18th to 27th in age-standardized death rate. The US dropped from 23rd to 28th for age-standardized years of life lost. It dropped from 20th to 27th in life expectancy at birth. It dropped from 14th to 26th for healthy life expectancy. The only bit of good news was that the US only dropped from 5th to 6th in years lived with disability.

So, there’s that.

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Conservatives Don’t Give A Damn About Governing

"12,000 Flags for 12,000 Patriots" Event

Before Barack Obama took office for the first time, lawmakers used to joke that the legislative process is not too different from watching sausage get made: neither side much enjoyed the hammering out of agreements, compromises, and capitulations of fundamental policy measures in order to placate their legislative opponents, but they nonetheless engaged in it. That all ended in 2009, and it’s been getting worse everyday since.

It began as a ploy by Republicans to paint Obama and the Democrats as unable to solve the country’s problems (which they themselves were responsible for), in order to take the House and Senate in the 2010 midterms. It worked, and they did. But what began as a political tactic — one that both parties have used in the past to varying degrees of success — has turned into a genuine political philosophy: legislation is bad, governing is worse.

That’s pretty much the only way to describe the premise of this joint Op-Ed article by William Kristol and Rich Lowry, respective editors of the Weekly Standard and National Review. In it, they argue for the killing of the immigration bill, which they label as “a stew of deals, payoffs, waivers, and special-interest breaks.” They basically just described every bill passed in Congress, ever. They described the sausage being made.

The immigration bill itself aside, Kristol and Lowry perfectly — though not intentionally — paint the picture of the current state of American conservatism: solemnly refuse to support anything that may get signed by President Obama. Their Op-Ed basically suggests what we’ve all known for some time now, that no legislation is better than some legislation, even if passing some legislation would mean circumventing actual problems and harms felt by the American people. From the sequestration screw-up to blocking 9/11 first responder benefits, Congressional conservatives would rather win than serve.

Lowry and Kristol are either totally ignorant of the actual harms felt by undocumented workers and their families, or don’t care, but it hardly makes a difference to the Latino voter they so desperately need in order to save their party. For these two editors, and for a vast majority of the Republican Party, the real problem is this:

During the debate over immigration in 2006–07, Republican rhetoric at times had a flavor that communicated a hostility to immigrants as such.

That’s it. Not policy, not action, but rhetoric. As long as Republicans soften their tone, the stupid minority Latino voter won’t know the difference. It’s a message that will ensure Republicans never get even a whiff of the White House for a long, long time.

Except, this “rhetorical” message might not play so well among those Latinos they want to coerce:

At the presidential level in 2016, it would be better if Republicans won more Hispanic voters than they have in the past—but it’s most important that the party perform better among working-class and younger voters concerned about economic opportunity and upward mobility.

Translation: concentrate on the white voters first. They will win back the country.

Modern American conservatism in a nutshell.

(photo by david)

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