Kvetch

Not that I'm complaining

What happens when the SS Trust fund runs out? And what happens between now and then?

Just to be clear, when you read in the media that the Social Security Trust Fund is projected to run out of money in 2033, and that after that, SS revenues in would be only enough to pay 77% of projected promised benefits — just to be clear — that’s only half the story.

The other half is that the “Trust Fund” is (currently) $2.8 trillion dollars of (non-marketable, but that’s not relevant) US Treasury securities. When we say that the trust fund is going to “run out of money” — that means that all those treasury securities will mature and/or be cashed out.

And that means that (currently) $2.8 trillion dollars that the rest of the federal government has borrowed from the trust fund will have to be paid *back*. Plus interest. And guess where all that money to pay it back will have to come from? You got it. Either taxes or borrowing from the public rather than from SS.

So, no, the US isn’t going to default against itself. SS benefits will be paid. But if those two sentences are going to hold true, when you consider the national debt, you need to add in this, too. So all those who keep saying “Oh, no — SS is not in crisis” — that may be true. But the /rest/ of the government financial structure is looking a a bit less healthy to make it so, even if that debt is not generally included when looking at national debt figures (because they are usually quoted as “national debt held by the public” and all that debt owed to SS is not counted. (currently $13 trillion, btw).

http://research.stlouisfed.org/fred2/series/FYGFDPUN

 

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Now please try to play nice, and, if you have taken the time to understand what you’re voting for, please vote.

Just a gentle reminder, amongst all the partisan hatred out there today:

To the Democrat partisans: Not all Republicans are reactionary selfish plutocrats, nor are all the religious entirely intent on shoving their religion down your throats. And, by the way, forcing “businesses” to pay for stuff (like health insurance, for example) is usually an incredibly inefficient and inequitable way of doing things. Moreover, voting against bad laws is just as important, perhaps even more so, than voting for good laws.

To the Republican partisans: Not all Democrats are godless socialists or communists intent on redistributing all the proceeds of hard work to the lazy. Nor are they all trying to keep the religious from their own beliefs. Moreover, voting for flawed but well-intentioned laws isn’t a sign that they are corrupt. The response to flawed laws which have passed is not usually simple repeal (especially because, get over it, it’s just not going to happen) but rather /fixing/ them.

To both: you may disagree with your opposition, but recognize that the vast majority of it, however much you disagree with them, comes from good intentions. Hating them doesn’t help. When you disagree, please try understanding where they are coming from, and educating them rather than vilifying them.

One more thing — there are reasonable moderates in both parties. Really.

Thanks. Now please try to play nice, and, if you have taken the time to understand what you’re voting for, please vote.

Yes, the Hobby Lobby decision

There are many distinct issues which come together in one ugly mess in this decision:

(a) employer-provided health insurance – always a bad idea in the first place, made worse by the mandates in ObamaCare.  ObamaCare should have *separated* employment and health insurance rather than mandating it (regardless of single payer vs. private insurers on exchanges);

(b) the Hobby Lobby decision is the fruit of two previous intersections of religion and law – a 1990 supreme court decision which said that religious beliefs should *not* get an exemption from laws (which decision was written by Scalia, and was opposed by all the liberals — because the exemption in that case was to a law regarding peyote use and native american religion) — which 1990 case led to the federal “religious freedom restoration act” in 1993 – unanimously passed by the house, almost unanimously (3 against) in the senate, and signed into law by Clinton — which made explicit that, at least at the federal level, religious folks *can* get exemptions from specific laws;

(c) as a result of the decision, absolutely *nobody* has lost their right or access to contraception – nor even will they be forced to pay – both the majority opinion and a concurring one proposed remedies which the government can easily push while still being compliant with the law (regarding who pays for it) – and regardless of who pays for it, this decision absolutely, positively, 100% does *not* stop anyone who wants from buying contraception.  At most, it’s about who is being forced to pay for it when someone chooses to buy it (and even that’s not entirely true, as the decision, again, proposed remedies regarding having third parties pay for it anyway)

(d) the Hobby Lobby decision rested not just on the ’93 RFRA, but that in combination with the fact that the administration was *already* granting religious exemptions to the law — had that not already been happening, it’s entirely possible, even likely, that the court would not have gone this way, since those existing exemptions demonstrated that the coverage was not considered essential.   Anyway, as far as I can tell, there’s no “trampling on women’s right” – there was, really, little more than a reaffirmation of religious loopholes – which may well be worse.

Econ 101. Incentives matter.

Economics 101: Incentives matter.

<http://www.bloombergview.com/articles/2014-04-13/blame-medicare-for-eye-popping-costs>

What you won’t see in this brief editorial piece is the full history of the Lucentis/Avastin issue – including the drug company trying to stop shipping the lower-cost one for ocular use (around 2007 or 2008) and later on, Medicare reimbursements for the off-label use of the lower cost drug being only about 1/3 the cost while leaving the plain 20% copay in place for the expensive one. And lastly, you also won’t see mention of the “copay card” that the drug maker uses to help people cover the 20% copay on the expensive drug (thereby helping themselves keep getting the full cost minus that “help” back from their insurance companies, and defeating the purpose of copays in the first place — this one doesn’t cover Medicare folks, though), nor the “Medicare Supplement” plans which cover the 20% copays so that there’s no disincentive whatsoever for folks to get these more expensive treatments.

Perhaps some of this could be justified if there was any clear evidence that this more expensive drug was, in fact, that much better than the cheap one. The editorial says it isn’t. I’m not sure they’re right, though I did see something about how when this started, there weren’t adequate studies on the cheaper alternative (partly because the drug company which makes it didn’t want them, since – you guessed it – it could have hurt sales of the more expensive drug).

But the bottom line is, of course, Econ 101. People respond to incentives. Even people with the best of intentions. And this doesn’t just affect Medicare. A little closer to me is, well, pretty much the entire financial industry. But on tax day, when we note that in 2013, $498 *billion* dollars was spent on Medicare, it seems like a good day to highlight this one.

<http://www.bloombergview.com/articles/2014-04-13/blame-medicare-for-eye-popping-costs>

Seat up or down?

This being Valentines Day, I am going to help you all by settling one of the perennial Men vs. Women debates once and for all.

The question should never have been “leave the seat up or put the seat down?”

You’re all idiots. The seat is irrelevant. Close the fucking lid, and do so before you flush.

And no, the fact that your pet likes to drink out of there is no excuse.


Names for new iPads?

Apparently, there’s a rumor going around – zero credibility, by the way – that Apple will be debuting a new 12.9″ larger iPad.  The existence of the product is not the terribly unlikely part, though.  One of the rumored names, however, is: iPad Maxi.

Okay, that’s not going to happen.

But is it really that far fetched given the prevalence of absurd names like “iPad mini” and even worse, “iPad Air”?

Oh, I suppose they could have gone all Starbucks on us and called them, the “iPad Tall” (for the mini, of course), “iPad Grande” (because, you know, “grande” obviously means “medium” or “regular” in some weirdo vernacular) and, of course, the new 12.9″ iPad Vente.  (Note that Vente theoretically means 20, as in 20 oz.  Note, too, that the Vente when applied to a cold beverage, is 24 oz.)

Ya, Starbucks names annoy the crap out of me.  I still say “medium”.  

Maybe it’s time for the “iPad Small”, “iPad Medium”, and “iPad Large”.

Heck, I’m not even so sure about the name “iPad” itself.

 

Kissing Away the Corporate Tax

Kissing Away the Corporate Tax:

(Via Economix)

Their calculation — which is only rough because it assumes no change in the behavior of companies or their shareholders — suggests that raising the top tax on long-term capital gains to 28 percent and taxing dividends as ordinary income (which faced a top rate of 35 percent at the time of the study) would raise enough money to pay for a cut in the federal corporate tax rate from 35 to 26 percent.

 

Raises some interesting ideas.  The commentary in response to this column seems to overwhelmingly be biased in a way which suggests that the commentators are obsessed with distinguishing corporations from the individuals who own them, while the whole premise of the paper and calculation in the first place is that we are taxing corporations (and thereby, their owners) in an inefficient manner.

Taxing corporations taxes all the owners of the corporation in the same proportion as their ownership of the corporation — effectively a flat tax.  The paper suggests that by lowering the corporate tax and raising the tax on distributions to the corporate shareholders (ie. raising taxes on dividends and capital gains), the taxes will be collected by the personal income tax – which is vastly more progressive than the corporate tax.

What it seems to ignore is the fact that if the corporations are paying a lower tax rate and the recipients of distributions are paying a higher one, corporations have a huge incentive to retain their earnings even if they don’t have anything better to do with them than distribute them to the shareholders.

It seems to me that the compromise is to start with the article’s premise – lower corporate rates and higher rates on dividends — and then permit the corporations to *deduct* any (or at least some higher proportion) of the money they use to pay dividends.  Right now, corporations pay corporate taxes on any earnings they use to pay dividends, and then the shareholders pay individual income taxes again on those dividends.  That double-taxation is why we’ve lowered the tax rate on qualified dividends.  But it looks like we did it backwards.  Perhaps we should have left the tax rate on the individuals where they were and lowered or eliminated the tax at the corporate level.

The problem with this is politics.  Too many folks keep trying to vilify corporations, and pretend that corporations are so distinct from their owners that taxing corporations makes more sense than it really does.  Thus, any proposal to lower corporate rates becomes way too easy for the opposition to paint in a way that the public eats right up – as giving breaks to evil large corporations while hurting individuals – even though taxing corporations in inefficient ways hurts us *all* by putting a drag on the economy, slowing growth, spurring inefficient uses of capital (like Apple leaving money out of the country instead of bringing it home and investing it here), and generating lots of work for folks whose primary task is to mine those inefficiencies in the tax code rather than eliminating them and having those same smart people do something useful.

Cheese, the most stolen food on the planet

Via an article about how some guy stole 21 *tons* of Muenster cheese, posted by my friend Amanda, we learn that cheese is the most stolen food on the planet. I share this because you, my kind Facebook readers, need to know this. Keep your cheese safe! Don’t let anyone move your cheese!

http://gothamist.com/2011/10/19/cheese_the_most_stolen_food_on_the.php

Goolsbee talks …

Goolsbee talks up Simpson-Bowles. He gets credit for that (unlike Krugman who simply frothed at the mouth over it). Then, Goolsbee rightfully pans Romney over how un-Simpson-Bowles-like Romney’s plans are. Spot-on. But then he loses it when he pretends that somehow Obama’s plans aren’t just as distant from Simpson-Bowles. Of course, Goolsbee worked for Obama for a while and may not want to speak badly of his former boss. Both Dems and Reps should be ashamed of themselves, and Goolsbee should be a little more honest here and admit that.
http://online.wsj.com/article/SB10000872396390443324404577595440116857330.html?mod=googlenews_wsj

Policies economists love but politicians hate

http://www.npr.org/blogs/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate

Well worth reading.  It’s mostly the same old usual bunch of issues that are politically unpalatable.  (My comments in parens)

1. Eliminate (or at least restructure and restrict) the mortgage interest rate deduction.  (It’s a terrible and entirely unnecessary distortion of the mortgage and real estate market.  And the primary beneficiaries are folks with relatively higher incomes and/or ownership of more expensive houses.)

2. Eliminate the employer deduction for healthcare and insurance.  (This is a biggee — the deduction, and the absurd ties between employment and healthcare — are just terrible artifacts which distort the entire health care sector of our economy – 1/6 of our economy is built around third-party payers which separate the beneficiary from the cost, tie care to employment, and because of reimbursement structures, are mostly fee-for-service — all of which promotes overuse, higher costs, complexity)

3. Eliminate the corporate income tax.  (Corporations don’t pay taxes.  Corporate taxes are paid out of the pockets of (a) customers, (b) employees, and (c) shareholders.  While I’m not sure I agree with the article that retained corporate earnings should be fully tax-deferred, at a minimum, eliminating corporate taxes on dividends paid to equity holders (and having the holders pay those taxes at their full marginal rate, not the goofy 15% we are using now on top of corporate taxes) at least makes the payment of corporate taxes on dividends part of our progressive tax structure.  I’ve also considered replacing all C-corps with a variation of the S-corp where earnings – whether retained or paid out in dividends to the owners – are all taxed but at the individual owner’s level, not the corporate level.  Any retained earnings would increase the owners’ basis, though, and that could get messy to track)

4. Eliminate all income and payroll taxes.  (The economists suggest a consumption tax instead, which arguably makes some sense in an economic efficiency way, but doing that while also making the tax in any way progressive, or even flat, with respect to income — because the high-income folks actually spend a lower proportion of their income — is very difficult.  Perhaps, instead of worrying about making the consumption tax progressive, make it a flat sales or VAT tax, eliminate all income and payroll taxes, but supplement it with a flat wealth tax similar to Florida’s intangibles tax.  This last bit has some messy consequences with respect to hard-to-value property such as a private company as compared to easy-to-value things like publicly traded stock.  But it’s worth digging into and it solves a lot of the problems of our existing tax structure where people with huge wealth can simply borrow against it and never realize capital gains nor pay taxes on it.)

5. Tax carbon emissions.  (Which means, yes, a higher tax on gas as well as any other fossil fuel.  That’s a good thing – there are high-cost externalities to these things which the users need to pay more for.)

6. Legalize marijuana. (Not sure how economists came up with this, but it makes pretty obvious sense to anyone who knows anything about marijuana.  Criminalizing such a widespread – and relatively, though not entirely, harmless product is an absurdly expensive notion with lots of deep and ugly consequences.  Prices are high, non-violent people go to jail or are threatened with it, and massive profits go to unregulated, untaxed criminals who reinvest in ways which hurt society way more than legal marijuana would.)

The economists who made up the most vocally anti-republican economists such as Brad DeLong and Paul Krugman are awfully quiet when these kinds of proposals come around.

And the closest thing to (1) and (2) that’s been discussed seriously – the Simpson-Bowles work – was entirely ignored by Obama as well as shot down by both Republicans and Democrats – with VP-candidate Ryan helping kill it off.

Unfortunately, since no mainstream politician is willing to talk about serious reform, all we are left with are third-party candidates.  Gary Johnson, the Libertarian candidate (and former governor of New Mexico should at least be included in the debates.  He clearly supports several of these ideas, and as important and serious as they are, letting the two mainstream candidates ignore them is a real shame.