Archive | June, 2010
Matt Yglesias explains the deficit crisis:
Here’s a shocking chart from the Congressional Budget Office’s latest long term budget outlook showing that unless Congress acts decisively, our debt situation will be totally fine:
See that line where the debt:GDP ratio is stable? That’s what happens under current law. If congress changes nothing, or the president vetoes everything, then this is what happens. No apocalypse. But nobody believes that’s going to happen. Nobody believes the Bush tax cuts will fully expire. Nobody expects the AMT phase-in to happen. Nobody expects physicians’ Medicare reimbursement rates to be held in check. And though I think he’s mistaken about this, Doug Elmendorf is skeptical that some cost-saving elements of the Affordable Care Act will ever be implemented. That’s the “alternative fiscal scenario” in which the debt level skyrockets.
But note that congress doesn’t need to do these things that it’s projected to do under the alternative fiscal scenario. Congress can stick to current law, and we’ll be fine. Alternatively, as Brad DeLong suggests, congress can commit to pay-as-you-go budgeting whereby if they choose to implement the large tax cuts and doctor salary increases they’re predicted to implement they offset these measures with other tax increases or spending cuts. If congress does that, we’ll be fine. This would give a successive series of congresses the opportunity to take a whack at modest ideas to increase the growth rate of health care spending.
Should be on CSPAN in the next hour. Annie Lowrey at the Washington Independent:
Here we go again. Last night, Sens. Harry Reid (D-Nev.) and Max Baucus (D-Mont.), the Senate majority leader and the head of the Senate Finance Committee, introduced a new unemployment extension bill. It is not actually strictly standalone: It includes an extension of the period in which homebuyers can close on a house and claim the homebuyer tax credit, a change agreed to in the House yesterday, and other provisions.
“Folks in Montana and across the nation are struggling to find jobs in this tough economy, and every day these benefits are lapsed is another day Americans worry how they will feed their families while they look for work,” Baucus said in a press release. “I urge my colleagues to stand with us to support American families and restore the unemployment insurance benefits that are often the only lifeline many workers have in this tough economy.”
Reid filed for cloture last night, and is working with Sen. Mitch McConnell (R-Ky.) to move the bill today, though Republicans have repeatedly objected to any measure that increases the deficit.
I think in movies they call this “dramatic foreshadowing”…
UPDATE: Obama spokesman Bill Burton sends over a statement: “Barack Obama doesn’t want to cut benefits and doesn’t want to raise the retirement age. He views Social Security as a sacred compact with our workers and seniors. So rather than using it as a political wedge for the purposes of a campaign, President Obama will work with Democrats and Republicans to ensure Social Security is solvent and viable for the American people, now and in the future.”
STEPHANOPOULOS: You’ve also said that with Social Security, everything should be on the table.
STEPHANOPOULOS: Raising the retirement age?
OBAMA: Everything should be on the table.
STEPHANOPOULOS: Raising payroll taxes?
OBAMA: Everything should be on the table. I think we should approach it the same way Tip O’Neill and Ronald Reagan did back in 1983. They came together. I don’t want to lay out my preferences beforehand, but what I know is that Social Security is solvable. It is not as difficult a problem as we’re going to have with Medicaid and
STEPHANOPOULOS: Partial privatization?
OBAMA: Privatization is not something that I would consider, and the reason is this: Social Security, I think, is — that’s the floor. That’s the baseline. Social Security is that safety net that can’t be frayed, and we shouldn’t put at risk.
For those who have really serious problems (and still have income), this will help:
WASHINGTON — The Obama administration is launching a special coverage program for uninsured Americans with medical problems this week, the most ambitious early investment of President Barack Obama’s health care overhaul.
But here’s the catch: Premiums will be a stretch for many, even after government subsidies to bring rates close to what healthier groups of people are charged.
And $5 billion that Congress allocated to the program through 2013 could run out well before that.
The Pre-Existing Condition Insurance Plan will begin accepting applications in many states on Thursday, with coverage available as early as Aug. 1, an administration official said Tuesday. Consumers can check availability in their states on a new website, healthcare.gov, starting Thursday. The goal is for all states to be enrolling people by the end of the summer.
The official spoke on condition of anonymity ahead of the administration’s announcement later this week.
“I would enroll as soon as you can,” said Stephen Finan, policy director for the American Cancer Society Cancer Action Network. “These rates are going to be as affordable as consumers can get these days, particularly for a high-risk individual.”
Premiums will vary from state to state. In California, for example, the cost for a 50-year-old is estimated at $575 a month, with a $1,500 annual deductible and 15 percent co-insurance. Premiums in states with lower medical costs could be around $400 a month.
“That’s still quite a lot of money, so there will be some folks who struggle to afford that,” said Marian Mulkey, health reform director for the California HealthCare Foundation. “But it’s going to mean a big jump in access.”
The insurance program is a stopgap fix for the most vulnerable until 2014, when core provisions of the new health care law take effect. At that time, insurance companies will be barred from turning away people in poor health, low- and middle-income households will get government assistance with premiums, and most Americans will be required to carry coverage.
I have this really great suggestion: How about we just bring the troops home? Hopefully, they’d be a lot safer here. Plus, think of the money we’d save!
Seriously, for those of you who believed Obama when he set a deadline, go back to bed and wait for Santa Claus:
WASHINGTON – Gen. David H. Petraeus on Tuesday left open the possibility of recommending that President Obama delay his plans to start withdrawing troops from Afghanistan next summer, if the new commander can’t turn around the stalemated war.
“There will be an assessment at the end of this year, after which undoubtedly we’ll make certain tweaks, refinements, perhaps some significant changes,” Petraeus told a Senate panel of the battle plan and the timeline Obama has laid out.
“I want to assure the mothers and fathers of those fighting in Afghanistan that I see it as a moral imperative to bring all assets to bear to protect our men and women in uniform,” he said. “Those on the ground must have all the support they need when they are in a tough situation.
Bring them home. Bring them home, bring them home. Stop this dastardly war, restore some sanity to our society.
Good morning, campers! Great news – at least, for those of you who still have underpaid jobs. Doesn’t this make you feel better?
The 6.8 million Americans out of work for 27 weeks or longer — a record 46 percent of all the unemployed — are providing U.S. companies with an eager, skilled and cheap labor pool. This is allowing businesses to retool their workforces, boosting efficiency and profits following the deepest recession since the 1930s, and contributing to a 61 percent rise in the Standard & Poor’s 500 Index since March 2009.
“Companies are getting higher-productivity employees for the same or lower wage rate they were paying a marginal employee,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “Not only are employees higher skilled, you have a better skill match. You have a more productive and more adaptive labor force.”
Falling wage pressures will help keep inflation low, contributing to lower Treasury-bond yields, according to Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. He forecasts 10-year Treasuries will yield about 3.1 percent in the third quarter, compared with 4 percent in April.
The lack of wage pressure also “reinforces the case for globally exposed companies” because “there has been better cost containment in the U.S. than in some of our competitors,” said Ethan Harris, head of North America economics at Bank of America-Merrill Lynch Global Research in New York. He said this would benefit businesses such as Cincinnati-based Procter & Gamble Co., the world’s largest consumer-products company, and Atlanta-based Coca-Cola Co., the world’s biggest soda maker.
Fired workers from Wall Street to South Carolina, where 58 percent of the unemployed have been without work for six months or longer, say they are networking, going back to school and retraining to stay relevant as jobs become more specialized. Some still may not achieve comparable positions, and Federal Reserve officials say lasting joblessness may weigh on economic growth.
“There is a structural dimension to unemployment that looks persistent,” Neal Soss, chief economist at Credit Suisse in New York, said in an interview. “Regrettably, it feeds on itself. People who have been out of work half a year or more naturally are going to have a harder time re-engaging on satisfactory terms. Their skills can atrophy, and their attitudes toward life and work can be damaged. It is debilitating.”
Come on, now, Neal, use the old noodle. You can always use them for Soylent Green, the tasty snack food! And someone can figure out a way to desalinize and monetize the tears of the unemployed first….
Yes, kids, this is the key to national productivity. Stop me if you’ve heard me say this before: Cheap. Disposable. Labor. Economist Douglas A. McIntyre at 24/7 Wall St.:
The secret to the amazing increases in productivity in the American economy is finally out. Companies in the US are not hiring full-time workers. They are gambling that they can keep their margins high by keeping a vast part of the workforce, perhaps millions of people, unemployed.
Unemployed people, it turns out to no one’s surprise, will work for very little. And, they will work without benefits, without job security, and without complaint.
According to Bloomberg, “The 6.8 million Americans out of work for 27 weeks or longer — a record 46 percent of all the unemployed — are providing U.S. companies with an eager, skilled and cheap labor pool.”
The development is a revelation, and a good one, for companies, municipalities, and states, all of which are tight on cash and unable to get credit at reasonable rates if at all. The nearly 10% unemployment rate in the US is supposed to come down late this year and early next. This assumes that companies with improved prospects will hire full-time workers as they have for decades. These workers have had pensions, benefits, and vacations. That makes a person who makes $40,000 cost $50,000 or $60,000. Employers want to bring the effective cost of that same worker down to $35,000 or perhaps $30,000.
While of course keeping the costs of housing, food, and gas up. So it’s a win/win!
Not only are the Democratic elites not going to stop it, they’re cheering from the sidelines. Here’s what Digby had to say about a bizarre exchange today between The Nation’s Chris Hayes and “liberal” asskisser Jonathan Alter on The Ed Show:
Keep in mind that Alter is an elite liberal villager with strong ties to the administration. And he not only wants to lay the problem at the feet of “liberal orthodoxy” which is insane, but he’s completely delusional about the congress’s ability to pass any jobs legislation that costs money — after all, they can’t even extend unemployment benefits. On what planet does there exist the slightest possibility of passing a direct jobs program with or without David Bacon? And why in the world would we want to pay people less money when the whole point is to stimulate the economy? We don’t want to spoil them?
I don’t know if he’s doing some light Heritage Foundation Report reading before he goes to bed at night but I’d guess, considering his professional and social circle, that this is reflective of the conversations that are being held among liberal Villagers, some of whom may very well be in the congress and the White House. This dry abstraction, and the idea that we just have to “adjust” to a permanently higher unemployment rate is just offensive. I wonder if Alter would be so sanguine about such a thing if he were among those who found themselves suddenly among the permanent underclass? (Not that he would — this sort of thing doesn’t happen to hard working, productive people such as he …)
And good for Hayes for saying at the end that he still believes in Davis Bacon. The look on his face was priceless — he kept it together nicely but was clearly gobsmacked by Alter’s bizarre outburst. Who wouldn’t be? It’s so reflexively and anachronistically thirdway/DLC that if I closed my eyes, I could see Joe Klein blathering exactly the same garbage on Meet the Press circa 1992. That this kind of hippie punching is still so automatic among the elites explains a lot about why we are so very, very screwed. They just can’t seem to help themselves, even if it makes no earthly sense at all.
WASHINGTON — Reversing its oft-repeated position that it was acting only on behalf of its clients in its exotic dealings with the American International Group, Goldman Sachs now says that it also used its own money to make secret wagers against the U.S. housing market.
A senior Goldman executive disclosed the “bilateral” wagers on subprime mortgages in an interview with McClatchy, marking the first time that the Wall Street titan has conceded that its dealings with troubled insurer AIG went far beyond acting as an “intermediary” responding to its clients’ demands.
[..] A McClatchy examination, including a review of public records and interviews with present and former Wall Street executives, casts doubt on several of Goldman’s claims about its dealings with AIG, which at the time was the world’s largest insurer.