Carrier Jobs

Lest this blog be all doom and gloom, all nay-saying all the time, let me today post that Donald Trump has achieved a victory very much along the lines of what he promised he'd do for Rust Belt workers: he has saved 1,000 manufacturing jobs from being shipped to Mexico.

Whether he did this out of a heartfelt need to save the American manufacturing worker or simply for political expediency, whether or not it is a one-time gimmick or a success he can replicate again and again, matters not.  2,000 workers were going to have their jobs shipped to Mexico and 1,000 of those people can breathe easy for now.  Sure, manufacturing jobs might not be coming back in the long run (except in small numbers), but that is not the point.  The people working those jobs want help now so that their children can go to college, etc.  And Trump delivered.

In addition to "stand by the President" political pressure, it appears Carrier doesn't want to jeopardize any potential slice of the Pentagon pie - a pie that tends to get larger when a Republican occupies the oval office:

While Carrier will forfeit some $65 million a year in savings the move was supposed to generate, that’s a small price to pay to avoid the public relations damage from moving the jobs as well as a possible threat to United Technologies’ far-larger military contracting business.

Roughly 10 percent of United Technologies’ $56 billion in revenue comes from the federal government; the Pentagon is its single largest customer. With $4 billion in profit last year, the company has the flexibility to find the savings elsewhere.

Members of Congress have been pressing to punish big military contractors if they move jobs outside the United States.

To the 1,000 Carrier works whose jobs are safe for now, it doesn't matter at all why their jobs were saved.  Their jobs are safe for now.  So rather than look for some excuse as to why this is a bad thing, let's congratulate Donald Trump on doing what he promised he would do on the campaign trail, at least this one time.

Health Care

Representative Tom Price of Georgia will be Donald Trump's new Secretary of Health and Human Services. 

There's a lot to discuss here.  Let's take this article piece by piece.  Throughout this blog post, the emphases added are mine.

Tom Price has made disingenuous statements concerning the rise of health care cost inflation under Obamacare:

Now, [Price] says: “Premiums have gone up, not down. Many Americans lost the health coverage they were told time and time again by the president that they could keep. Choices are fewer.”

It is true that premiums have gone up; this is to be expected with health care costs, whose inflation typically outstrips core inflation considerably.  However, health care inflation has come way down since Obamacare was implemented.  This is, in fact, one of the most notable achievements of Obamacare:

Health care costs are expected to grow 6.5% through next year. While costs have finally reached a point of equilibrium after years of double-digit growth, they are still expanding far faster than overall inflation, leaving employers and insurers trying to figure out how to stomach the new increases. The answer may not please many consumers.

So Tom Price is telling a white lie about premiums.

Tom Price is the author of the Empowering Patients First Act.  Let's discuss that act.

The legislation Mr. Price has proposed, the Empowering Patients First Act, would repeal the Affordable Care Act and offer age-adjusted tax credits for the purchase of individual and family health insurance policies.

The bill would create incentives for people to contribute to health savings accounts; offer grants to states to subsidize insurance for “high-risk populations”; allow insurers licensed in one state to sell policies to residents of others; and authorize business and professional groups to provide coverage to members through “association health plans.”

Tax credits again!  I sure hope they work.  The thing about an HSA (health savings account) is: it's just an account you put your own money in that might not be taxed all that heavily, on which you draw when it's time to pay a portion of a deductible.  It doesn't obviate the problem of the deductible in the first place.

This isn't a uniquely Republican idea - the Hillary Clinton plan for health care reform tweaks were based in large part around tax breaks as well, as mentioned in this very good and brief article discussing some of the issues with modern insurance.

Tom Price has a history of favoring the doctor over the patient:

He has introduced legislation that would make it easier for doctors to defend themselves against medical malpractice lawsuits and to enter into private contracts with Medicare beneficiaries. Under such contracts, doctors can, in effect, opt out of Medicare and charge more than the amounts normally allowed by the program’s rules.

Most people are patients and not doctors, and are therefore unlikely to be thrilled by Price's point of view.

Price would, apparently, repeal the Affordable Care Act's expansion of Medicaid:

The biggest cut to the poor in Price's plan is the full repeal of the Medicaid expansion, a program that currently covers millions of low-income Americans, which Price replaces with, well, nothing. 

The Empowering Patients First Act might make it possible for those people who are sick and suffer a lapse in coverage - perhaps from losing a job, or facing another economic hardship that makes maintaining insurance - pay the price:

Prices' Empowering Patients plan, like Obamacare, requires insurance plans to offer coverage to any patient regardless of how sick they are. But the Empowering Patients plan, unlike Obamacare, would let insurers charge sick people more if they did not maintain "continuous coverage.

...

Here's how it works: If a cancer patient goes straight from insurance at work to her own policy, her insurer has to charge her a standard rate — it can't take the cost of her condition into account. 

But if she had a lapse in coverage — perhaps she couldn't afford a new plan between jobs — and went to the individual market under Empowering Patients, insurers could charge her up to 150 percent of the standard premium for her first two years of coverage (you can read this section on page 151 of the bill). 

A patient can once again qualify for the standard rate if she maintains 18 months of continuous coverage — although that would likely be with premiums set at the higher rate. 

The Empowering Patients Rights Act is skewed to favor the younger, healthier portion of the population, and wouldn't necessarily be great for those preparing to bring a child into the world:

Empowering Patients makes the individual market more advantageous for healthier people. It eliminates the essential health benefits package, which mandated that all insurers cover a set of 10 different types of care including maternity services and pediatric care. Empowering Patients would allow insurers to cut whatever benefits they no longer want to cover — they could stop covering maternity benefits, for example, to make their plans less attractive to women who plan to become pregnant. This would likely benefit healthy people, who generally want less robust coverage at a cheaper price. But it'll send the cost of more comprehensive plans — the plans sicker people need — skyrocketing. And it could leave someone who, say, wants health insurance to cover her maternity costs completely out of luck. 

It would allow insurers to jack up prices on the elderly, and perhaps drive them out of the insurance market:

It does this by allowing insurers to charge their oldest enrollees as much as they want. Right now, insurers can only charge the oldest enrollees three times as much as the youngest — that constrains prices for patients in their 50s and 60s. 

Eliminating this regulation would increase "increases the overall number of people with coverage, but older people end up falling out of the market as premiums rise," says Christine Eibner, an economist with RAND Corporation who has modeled similar changes to Obamacare's age-rating provisions. 

The tax credits in Price's plan are based on age, not income, which leads to some interesting disparities:

Obamacare's tax credits are based on income, with those who earn less getting more help. Empowering Patient's tax credits would only be based on age, giving more help to those who are older (and who will presumably be charged higher premiums). The tax credits outlined in the bill are as follows:

• $900 for children under 18
• $1,200 for those between 18 and 35
• $2,100 for those between 36 and 50
• $3,000 for those 51 and older

This means that that Bill Gates would qualify for the largest tax credit simply because he is 61-years-old. Under the Empowering Patients bill, Gates' net worth of $83 billion — presumably enough to purchase health coverage — would do nothing to disqualify him. Under Obamacare, he gets no help. Conversely, a 23-year-old with little income and health problems gets minimal help under Price's plan — despite the fact that they need support much more than Gates does. 

One upside to Price's plan is that health coverage, while it might be less comprehensive, might also be cheaper:

The plans under Price's proposal would near certainly be cheaper because they wouldn't have to cover so many benefits. A 55-year-old under Empowering Patients might find lower premiums for plans that cover fewer benefits. But its also true that the plans that do offer comprehensive benefits would likely prove financially out of reach for many.

I try to keep an open mind when writing this blog, but the bottom line about Tom Price is: unless you are a committed ideological conservative, who values the unfettered free market at all times even if the result of the unfettered free market is widespread malaise and suffering, there's hardly anything to like about the Empowering Patients First Act, other than that it might save the government some money, but if the government is truly concerned with saving money, then why the likely tax plan?

One last bit, and then I think I need to table this already-lengthy blog post until tomorrow:

Most of the changes in Empowering Patients have to do with people who get insurance through Medicaid or on the marketplaces. But there is one important change the plan would make to employer-sponsored insurance: It would cap the tax exclusion for employer-sponsored coverage.

The health insurance tax break is the biggest in the federal budget; the government loses out on $260 billion annually by not taxing health benefits. And economists across the political spectrum agree that we should eliminate or at least reduce this tax break, which currently gives those with jobs a huge discount on their coverage — and an incentive to buy more coverage than they actually need. 

Price's bill proposes limiting the employer-tax exclusion for insurance to $8,000 for individual policies and $20,000 for individuals. 

As popular as this provision will be with economists, you can bet that the public will hate it, as it would make some health plans significantly more expensive — and face similar pushback to Obamacare's Cadillac tax.

There's a lot more to discuss, and we'll get to it.  For now, I leave you with Paul Krugman's testy denunciation of Trump voters who, perhaps, voted themselves out of health insurance coverage.  3.5 million Americans?

We'll find out!

Debt Hysteria

I'm absolutely slammed at work today, so I'm gonna laze out and tell you to go read Dean Baker's latest.  If you're also slammed at work, the key points are below.

Trump's infrastructure plan might not add a dime to the deficit up front, but will cost the government money in the long run.  Emphases added throughout is mine:

But if we give the tax credit (Trump has proposed a tax credit of 82 cents on the dollar), then we have added zero dollars to the government debt. However, we will collect less money in tax revenue in future years. Given his plan, we will collect $820 billion less in revenue over the period where the tax credits are cashed in. Other things equal, this will raise our debt in future years by $820 billion compared to a situation where we did not have the infrastructure spending, but at least for initial scoring purposes we can say that it didn't add to the debt, so the Peter Peterson–Washington Post crew should be happy. (The boost to output from greater productivity should add to tax revenue in future years, but this would be the same regardless of whether we paid for the $1 trillion in spending through borrowing or a tax credit. If the economy is below full employment, there will also be a boost to demand, and therefore output, as a result of this spending, but again this is independent of how we finance the spending.)

And then Baker raises the key point about government debt fear mongers:

Let's turn to the other part of the story, the tolls. Trump's plan will bias infrastructure spending towards areas that are able to create a revenue stream, like tolls, as opposed to clean drinking water (think Flint) or other areas of public investment like child care, which may lead to diffuse gains. It may also lead to inefficiencies since collecting tolls can be a waste of resources. (Imagine paying tolls to use the sidewalk in front of your home.)

But ignoring these issues, let's think about the tolls for a moment. Suppose the government paid for the infrastructure and used tolls to recoup part of the cost. The tolls are then future revenue to the government, just like any other tax. But with Trump's plan people pay the tolls to private companies, so the money doesn't go to the government. In Peter Peterson–Washington Post land we are supposed to be worried about the burden to our children of the tolls collected by the government, but somehow the burden imposed by the private companies don't count.

That's correct.  It's fine to be hysterical about government debt, but where's the hysteria over economic burdens imposed by the private sector?  If the government isn't burdening taxpayers, but those very same taxpayers are being burdened by private vendors, well, does it make a lick of difference who imposed the burden?  A burden is a burden is a burden.  At least the government is answerable to the taxpayers via their role as a voting public.

"What's the total burden, and who imposes it?" Questions that are infrequently asked, on both right and left, much to the detriment of all.

There's also this: Donald Trump claims that "millions" engaged in voter fraud.  It's likely not true, and it also doesn't matter; his fan base will get pumped up no matter what he says, and his opponents will remain riled up with each bombastic claim.  I document it here for posterity but it's ultimately of no consequence.

Now it's back to work for me!  Y'all have a great day.

Corruption and the Trump Organization

People like to get fired up about government corruption, with partisans largely overlooking their own party's corruption while turning a burning eye on the corruption of the partisan Other.

There's been corruption since days of the founding fathers, and yours truly finds it a little hard to get worked up in about corruption in general.  Corruption, to a certain extent, is the price of doing business, and only when it is grotesquely egregious does it pose a crippling problem.

In recent decades, one can look back to the shady origins of Halliburton, née Kellogg, Brown & Root due to the mutual back-scratching of/by Lyndon B. Johnson, the President who would sign the Voting and Civil Rights Acts.  Dick Nixon, who enacted détente and created the EPA, was a crook, and Gerald Ford let him off the hook, making him corrupt by association.  During the Carter years, the Abscam scandal went down.  Ronald "Morning Again in America" Reagan presided over one of the most corrupt Pentagons of modern history, and George H.W. Bush was directly tied to the Reagan years, as his veep.  We've also recently been Whitewater'd and Clinton Foundation'd to death, scandals that most Americans shrugged off during the "boom years" of the 1990s but which have always driven the Right up the wall.  Halliburton popped back in to say "hello!" to large scale corruption again during the Bush/Cheney years.  According to Steve Bannon's organization, the Obama administration was the worst of all.  (For a less breathless take on Obama administration corruption, here's some favor-trading; pretty mild, but not non-existent).

So that's history.  Despite corruption, life went on for better or for worse under each of those administrations.  War, the economy, the environment, to name a few concerns, are far more consequential to our lives on a daily basis than corruption.

But, to the extent we care, what about potential corruption under the Trump administration?  It's looking like it could be quite a doozy, and quite blatant.  Assuming you don't have the time to read this article in its entirety, allow me to summarize for you:

• The Trump children are sitting in on the President-elect's meetings with foreign leaders.  Given that the Trump children run the Trump Organization, and have nothing to do with official US policy, that does seem a bit dodgy, no?


• The Trump Organization may have bribed two pension funds to excessively favor investment in Trump hotels - hotels which remain unfinished - in Brazil.  In Brazil, the President has the power to investigate, or not, charges of corruption.  You can see the potential for conflict here.


• The Trump Organization has significant real estate interests in India, a nation where many permits are required to get any building done.  To bring a real estate project to fruition, you might rely on bribery, or you could simply be a good person to know, such as President of the United States.  Might a President with real estate interests in India might lean India's way in any potential conflict with India's long-running next door neighbor and rival, Pakistan?


• In Turkey, the Trump Organization has real estate interests and other business ties.  Donald Trump has been especially forgiving on Turkey Prime Minister Erdogan's authoritarian crackdown on all who oppose him.  This should surprise no one, exactly, except those who really believe that Trump is going to "drain the swamp".


• There's also a Trump Tower in the Philippines, where colorful figure Rodrigo Duterte has named a business associate of Trump's to be the special envoy to the U.S. (in total fairness, Duterte named his envoy back in October).  So once again, potential conflict of interest is alive and well.

(Incidentally, if you like bloviating strongmen, Duterte is the guy for you.  This article makes a great read.  The Donald Trump of the Philippines isn't known for bad business deals and reality television - he's known for arranging death squads to hunt down drug users.  That's one way to take a bite out of crime!)

Now, Turkey, India, and the Philippines are all allies of the United States (although it will be interesting to see what headaches Ergodan, the rightest government of Nadendra Modi and Duterte provide America and the Trump administration over the years - each really deserves their own blog post and I don't have time today) so perhaps business ties from the Trump Organization truly will be simply incidental to relations with these countries.

But these business ties might just bind the hands of the Trump admin, should there be, for instance, conflict between the Philippines and China in the South China Sea, or scuffling between Turkey and any of its neighbors, particularly Iraq or Syria, and of course, there's always India/Pakistan to worry about.

And if that proves to be the case, corruption will in fact be more consequential than simply the price of doing business.

It will be interesting to see how it all plays out!

Workers, Productivity, Manufacturing and Fannie and Freddie

Since I spent yesterday largely throwing cold sewage on the hopes and dreams of my fellow Americans, let's have some more upbeat, anti-establishment frank talk from Dean Baker today, who thinks that despite Thomas Friedman's nay-saying, Trump's mercantilism could perhaps work:

While Trump will not be able to bring back the six million manufacturing jobs we have lost in the last two decades, it is certainly possible that he could bring back 1–2 million manufacturing jobs if he were to get the trade deficit closer to balance. That would be a big deal for lots of workers, especially if the workers who held these jobs were able to form unions to ensure decent wages and benefits.

(emphases added mine, throughout this whole blog entry)

In a separate piece, Baker throws some shade on the concept of "job killing robots":

In spite of all the stories about robots taking all the jobs, we still can't find any evidence in the productivity data. Productivity has averaged just 0.6 percent annually over the last six years, the slowest growth on record.

But now the Wall Street Journal alerts us to a new problem. It tells us that small businesses can't find enough workers in low-skilled occupations. If that sounds to you like the direct opposite of the job-killing robots story, then you're way ahead of many of the pundits who get paid big bucks to say smart things about the economy.

He also puts our current, woeful minimum wage in some context:

In one case it mentions a roofer who is now paying most of his workers over $20 an hour. While this is a better wage than most workers receive, roofing is a physically demanding and dangerous job. If the minimum wage had kept pace with productivity growth since the late 1960s (as it had in the prior three decades), it would be almost $19 an hour today, so crossing $20 an hour hardly seems like especially high pay in 2016. (It's equal to 0.008 percent of what Goldman Sachs pays its speakers.)

He also reminds us how capitalism is supposed to function:

It's certainly possible that many of the business owners who are complaining about a labor shortage would not be able to stay in business if they offered higher wages. But this is the way a market economy works. Businesses that can't afford to pay the prevailing wage go out of business and their workers go into areas where their labor can be more productively employed. This process is the reason that half of the country is no longer working in agriculture.

That's correct; in the free market system, businesses that can't keep pace with competing businesses fail, and that's the way it, in fact, should be.

So, fingers crossed that the Trump economic programme does in fact restore 1-2 million manufacturing jobs; we could use them.

If you prefer a story of graft, however, here's a good one.  To summarize we need a brief recap.

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac), which in 2008 owned or controlled about half of the nation's mortgages, were on the threat of the collapse during the financial crisis of the same period.  The taxpayers, through the Housing and Economic Recovery Act (HERA), bailed Fannie and Freddie out to the tune of $187.5 billion.

The Federal Government, not unreasonably, in 2012 placed what was known as a "profit sweep" on the agencies, essentially saying, hey, we bailed you out, so if money is being made off of you now, it's ours.

Investors in Fannie and Freddie - you know, the people who were bailed out - cried foul, and sued.

Meanwhile, hedge funds - who do not need to disclose their stakes in Fannie and Freddie stock - have been buying the (deeply depressed) stock in huge quantities.  Their end game?  Use political connections to the incoming Trump administration to ensure Trump administration privatizes Freddie and Fannie.  Before the crisis, Fannie and Freedie stocks were priced at around $60 a pop.  If you buying those stocks now at less than $2, and the Trump admin ends the "profit sweep," so that the Federal Government is no longer profiting but the investing hedge funds are - well, that could be quite the payday for the hedge funds assuming the Fannie and Freddie stock goes anywhere close to its pre-crisis price.

Anyways, one thing that is not a corrupt bargain between politics and the financial sector is this new kitten that my wife and I adopted, with which I am going to go play now.  AW, KITTENS.  See y'all later!

The CFPB

I had a great Thanksgiving; there was no politics talk, just beer, wine, more beer, more wine, food, more food, more food, football, some kids running around including one kid who got totally naked in public (you gotta be free to be you, man) and eventually, sleep.

The NY Times arrived to today to remind me that the holiday is over, and I'm here to catch you up.

What will happen to the Consumer Financial Protection Bureau under Donald Trump?  The CFPB is a little-known but significant new body to emerge during the Obama years which fights debt collectors and other sleazebags.  The CFPB doesn't function perfectly, but, like a Band-Aid, it is arguably better than nothing.  It was established by the Dodd-Frank Act in 2010 and has been a thorn in the side of the debt-collection industry - an industry that, arguably, should not exist.

Let's say you run a business, and you advance a loan to a customer of one of your products, and that constumer never pays you back.  You have a right to go after that person, because they owe you.  How else are you supposed to keep your business running if people feel at liberty to not pay your bills?  You might need to hire a third party to go after the delinquent, since you have a business to run and don't have to track down folks who owe you.  I think even the biggest leftist in the world would be on board with the rights of the business, to this point, to collect the money that it has coming to it.

Now, however, say you have decided to write that debt off as part of the cost of doing business, period, and you decide to sell your debt to a third party - a debt collector - for them to collect for themselves.  In this instance, the customer who never paid for their goods remains morally in the wrong, sure, but what right does this third party have to collect any debt from anyone?  The original business decided the collection effort wasn't worth it.  The debt collection agency in this case is sort of like a pirate, going after booty rather than what they are properly due.  Much harder to root for such a party than for the original debt-issuing business.

Still, enforcement even at the hands of a third party can be a deterrent to customers incurring debt that they have no intention of paying back.  It's still "crime fighting" in a sense, so a moral case can be made for the existence and functioning of the debt collection industry.

But what happens when a debt collection agency decides to use deceit, harassment, or intimidation to collect debts?  What happens when the debt to be collected in the first place isn't even legitimate?  When it is a result of shoddy bookkeeping on the part of the originally issuing businesses and the debt collectors themselves?

I personally was in court against a debt collection agency.  I didn't understand the nature of the debt that I allegedly owed, as the opposing attorneys in the case couldn't produce one iota of evidence demonstrating that the debt was valid (I suspect someone may have obtained my old Sam Ash music store credit card, or perhaps I purchased something on that card and was never billed for it, or was billed at the wrong address).  I fought back, with the help of a lawyer friend, and won, but if I hadn't had a lawyer friend I wouldn't have been able to do that, and I would have ended up owing $2,000 for... what?  The debt collector couldn't even tell me what the debt was for.

Arguably, a debt collection agency should at least know, and be able to demonstrate, what the debt they're seeking to collect is for, when it was issued, and under what circumstances.

Debt collectors aren't the only rather borderline industry the CFPB has inconvenienced.  It has gone after the issuers of dodgy mortgages, too - you know, the subprime people. 

The financial industry has bellyached, as it is wont to do, about the CFPB, but, hey, guess what? They've lived:

After much grumbling — and many dire forecasts that the new rules would limit credit and harm consumers — mortgage lenders adjusted. They made nearly 3.7 million loans last year for home purchases, the highest number since 2007, according to government data.

“It seems like the financial services industry has figured out how to adapt to this new regulatory regime,” said David Reiss, a professor at Brooklyn Law School who studied the effects of the bureau’s rule-making. “We’ve moved from the fox-in-the-henhouse market in the early 2000s, where you could get away with nearly anything, to this new model, where someone is looking over your shoulder.”

I'd love to be able to drink openly on the job, but I don't complain that I'm not allowed to, you know?

I want to be objective, and it's always possible that the CFPB is actually strangling the financial industry and that the economy would be booming without it, but given the statements above, I'm inclined to think that claim is a bunch of malarkey.

It looks likely that the CFPB will not be abolished entirely, but rather, Hensarling'd:

But Donald J. Trump’s election revived calls from critics of the bureau to eliminate Mr. Cordray’s position and replace the agency’s leadership with a five-member, bipartisan commission. The critics say the move would temper the bureau’s more radical impulses; supporters say it would hamstring the agency and prevent it from doing virtually anything.

Representative Jeb Hensarling, Republican of Texas and the chairman of the House Financial Services Committee, introduced legislation in September along those lines, called the Financial Choice Act. If Congress wants to act immediately to curb the consumer bureau, that bill could become a blueprint.

That's finesse.

In other news, Donald Trump may be looking to scotch NASA's climate research, because it is "politicized."  (A lot of football experts tell me the Jets are not a very good team, but I think their opinion is politicized, honestly.)  This research costs $2 billion a year, a little bit more than twelve F-35 fighter jets.  I'll let you formulate your own opinion about that potential trade-off; watching the icecaps melt year after year is pretty depressing, so maybe the planes are a better bet.

Keep your eyes on the Office of Information and Regulatory Affairs if you want to watch the Trump administration put the kibosh on environmental regulation enforcement without actually changing the regulations themselves.

I could go on and on and on, but there's plenty of days to come, so for now let me just say Happy Thanksgiving to all of you, and even if you don't like those Peanuts animated movies, you gotta admit this song is pretty dope.

Politics Argument Primer and News Roundup

Good grief.  Less than two weeks on the job and I've missed two blog posts in a row.  I've failed the American people.  Thank God Donald Trump is here to Make America Great Again, so I don't have to.

I'm part of the arguably overstressed legal industry.  I'm just a secretary, not a litigator, thank God.  If I was a litigator I'd earn a lot more money (after I paid off considerable debt, of course) but I'd be even more stressed, and I can't imagine that.  I won't bellyache too much about my workload except to say that I worked, I wasn't able to stop working, and consequently I missed my posts.  Forbes contends that the "overworked American" is a myth, but over in Europe you get four weeks of paid vacation or more, so you be the judge (those lazy Austrians!).

Argue With Your Loved Ones

It's Thanksgiving today, so there isn't really time to do a great in-depth blog post.  In case you're planning on having political fights with your relatives, here's a quick recap of employment growth and wage growth since the Carter years.  The info comes from this article and also here, but perhaps more importantly, here.  There's more to say about both these topics, but you're not writing a book, you're arguing with your family!

Under Carter, 9 million plus private sector and 1.3 million plus pubic sector jobs were created.  Wage growth was largely stagnant, and then there was an external oil supply crisis as well as a Fed that wouldn't stop targeting the money supply instead of core inflation.  The result was "stagflation," and Jimmy Carter, not the world's savviest politician honestly, lost by a landslide in 1980.

Under Reagan, there was a severe recession caused by the Fed but good times were here again when oil was discovered in the North Sea and the Fed lifted rates, thus ending the recession it has generated (to, successfully, fight inflation).  Reagan created 5.3 million plus private sector jobs in his first term and 9.3 million plus in his second term, while slashing the public rolls by 24,000 plus public sector jobs in his first term before they expanded by 1.4 million plus in his second term.  The median income for young people rose 4% during the Reagan years; less so for older workers, but those rose to.

Ah, but when you adjust for inflation, as you always should (which means basically that if a cup of coffee used to cost $1 and now it costs $2, if my salary went from $15,000 annually to $30,000 my wages are flat.  A drastic oversimplification, but easy to grasp), wages basically didn't budge during the Reagan years.  So employment grew but people didn't have higher purchasing power at the end of this time in office.

Under George H.W. Bush, a meager 1.5 million private sector jobs were created, and around 1.1 million public sector jobs.  Income growth fell, even without inflation-adjustment; older people (44 years and up) actually saw their wages, as a whole, go down.  Appropriately, George H.W. Bush was a one-term President.

Bill Clinton 10.8 million private sector jobs in his first term and 10 million in his second term.  Public sector employment also rose, though considerably less than it had under "government is the problem" Reagan.  692,000 new public sector jobs in Clinton's first term, 1.2 million in his second.  Again, workers aged 44 and older saw their collective wages go down, but everyone else experienced the highest income growth of the period from the late 1970s to present.  But, once again, when you adjust for inflation, wages were basically flat.

Under George W. Bush, there was net private sector job loss for the first and only of the Presidential terms we're discussing.  800,000 plus private sector jobs were lost in the first George W. term.  In the second term, a meager 400,000 plus private sector jobs were created.  In other words, the private sector lost around 400,000 jobs under George W. Bush, the only President - including Carter and Obama - to attain this distinction.  On the other hand, he did create around 900,000 public sector jobs in his first term and 844,000 in his second term.  Income growth was tepid under Dubya, though better than his father.  Workers aged 44 and up continued to lose ground.  Wages adjusted for inflation stayed basically flat.

Under alleged socialist Barack Obama, who inherited a recession that put the one Reagan inherited to shame, 1.9 million new private sector jobs were created in his first term, and 8.3 million under his second term.  That's the third-best private sector job growth on the list, after Clinton and Reagan.  Intriguingly, more than 700,000 public sector jobs were destroyed during the first Obama term.  Insofar as he was a big socialist, he was a pretty lousy socialist, eh?  In his second term public sector hiring rebounded at around 200,000 hires, but still, Obama remains the only President on this list to, on the net, shed public sector work - around half a million public sector jobs.  Even under the Gipper, public sector employment went up, so if you hate government, arguably you should be voting for a "centrist" Democrat like Obama or Hillary Clinton, who won more votes than Donald Trump in this most recent election put who had a pathetic ground game, amongst other flaws, and lost the election.

Obama's income growth was the third-best for youngsters, after, again, Clinton and Reagan, but it was the worst of all for the long suffering 44 years and older set.  That might help explain why older voters broke so decisively for Trump this time.

Inflation adjusted median income-wise, it's worth pointing out that while GDP has roughly doubled over the period from the late 1970s to today, the median income has remained flat or even declined slightly.  From 1948 to 1973, both GDP and the median income roughly doubled.  So, how well has "Morning Again in America" and "The Era of Big Government is Over" worked out for everyone?

Eat, and fight, well!

Donald Trump News Roundup

Ok, I gotta do this quick, because my wife wants me to peel them sweet potatoes and get my ass in the gear generally.

Donald Trump gave the press a good talking to.  Accounts differ on the degree to which he actually gave major media figures a real verbal lashing, but the only account that matters in the end is the public account, and here, Donald Trump has won.  He comes off as the person who not only got it right while everyone else got it wrong, he also belittled media organizations that came off as a preening and smug while simultaneously giving him tremendous amounts of free press during his campaign.  On this one issue, the Right and the Left can broadly agree.  CNN, MSNBC, FOX, Good Morning America, even my beloved New York Times spent the whole election assuring us that Hillary Clinton had it in the bag while simultaneously not holding Trump's actual proposals up to public scrutiny, and, hey, here we are.  These major media organizations are smug and do have their heads up their asses.  So this is a win for The Donald.

On the other hand, Trump gave a very conciliatory interview with the Times.  He stated that he's unlikely to attempt to actually put Hillary Clinton in prison, which sent many conservatives into a tizzy but is unlikely to bother anyone with more important things to worry about.

Trump's language and positioning in this interview is extremely interesting, because somebody is getting the bait-and-switch.  The question is: who?

1. Is the media getting the bait-and-switch?  By more or less stating that much of what he said on the campaign trail he didn't actually mean, Trump is winking at major establishment figures.  But perhaps this is a cover for his true, more radical aims?  To play the statesman now and lull his opposition to sleep?  This is Politics 101, after all, and Trump has demonstrated he understands politics.

2. Alternately, are Trump's voters getting the bait-and-switch?  Is this the real Donald Trump that the Times is now seeing?  Maybe he's going to simply be a conventional Republican after all - one who doesn't especially care if manufacturing comes back to the Rust Belt, who isn't all that bothered by Muslims, and so forth?

We really won't know which is true until we see his first year in action, but this remains, to me, the single most interesting thing to speculate about for the time being.

Trump had some more cabinet appointments.  Betsy DeVos for Education Secretary is a thrilling pick if you believe the traditional public school system should be abandoned in favor of charters, and terrifying if you believe the opposition.  I'll have more on her soon.  For now, simply consider the following.  Emphases added mine:

Michigan is one of the nation’s biggest school choice laboratories, especially with charter schools. The Detroit, Flint and Grand Rapids school districts have among the nation’s 10 largest shares of students in charters, and the state sends $1 billion in education funding to charters annually. Of those schools, 80 percent are run by for-profit organizations, a far higher share than anywhere else in the nation.

The DeVoses, the most prominent name in state Republican politics, have been the biggest financial and political backers of the effort.

But if Michigan is a center of school choice, it is also among the worst places to argue that choice has made schools better. As the state embraced and then expanded charters over the past two decades, its rank has fallen on national reading and math tests. Most charter schools perform below the state average.

Uh oh!

There's also Nikki Haley for U.N. Ambassador.  What can be said about Haley, or about the U.N. Ambassador in general?  She will be there to give speeches for the administration, and she should be fine at it.

Then there's Ben Carson for Secretary of Housing and Urban Development.  What does Ben Carson know about housing and urban development?  It's unclear at this time.  Cynics would argue that Trump has merely picked a random "urban" person who he happens to know, and who backed his during the campaign, to head a department he knows nothing about. 

Then there's Jared Kushner, Trump's son-in-law, who has been lauded as an "influential figure" concerning Israel-Palestinian peace talks.  That seems like, potentially, an odd choice.

In any event, I've got to get ready to prepare and consume an inordinate amount of food.  Y'all have a lovely Turkey day, and while we're at it, Recep Tayypid Erdogan, legit budding dictator of Turkey, sends his regards to you and the incoming Trump administration.

Gobble gobble!

Obamacare Repeal and Infrastructure Plan Questions

Good morning, happy campers!  Let's start today off with a look at whether or not millions will lose their health insurance.

It appears that by dint of the mere threat to repeal Obamacare, insurers may be headed for the exits at an even more rapid pace than they already were.  Emphases added mine:

But repealing the law without a replacement is likely to spook health insurers, who might bolt from the markets prematurely to avoid losses as some people stop paying their premiums, while others rush to have expensive medical procedures before losing coverage. Insurers would have little incentive to stick around without knowing know what to expect at the end of the transition. And that could spell chaos for consumers. 

How many folks will have to find new health insurance options if Obamacare is repealed?  Why, 20 million folks.

GOP lawmakers say they plan to repeal the Affordable Care Act as soon as President-elect Donald Trump takes office, including a transition period of a year or two before it takes effect. That way, they satisfy their base while giving notice to 20 million Obamacare customers that they must find other coverage options.  

What's the GOP alternative to Obamacare?  Nobody seems to know for sure.  Most likely block grants to states are involved.  The upside would be allowing people to buy insurance across state lines, which is great.  In all likelihood, the health insurance marketplace would resemble the pre-Obamacare health insurance marketplace, with medical inflation outstripping regular inflation and millions more Americans (maybe 20 million, we'll see) uninsured:

Overall health spending rose by 5.3 percent in 2014, according to a report issued Wednesday by the Office of the Actuary at the federal Centers for Medicare and Medicaid Services. 

That contrasts with a 3.7-percent average inflation rate for health spending in the previous five years — and just a 2.9-percent growth rate in 2012. 

That said, the higher health spending growth rate seen last year was still lower than in most years seen before the Affordable Care Act began being implemented in 2010, CMS noted. From 2000 to 2009, health-care spending grew by an average of 6.9 percent each year.

The one, very good, reason to believe that a repeal of Obamacare might not be in the cards is because to throw millions of people off their health insurance could be a political disaster that the GOP will not want to deal with in the midterms, or at any point:

This would be an unmitigated political disaster. The stories — of people with cancer, diabetes and more who were suddenly stripped of their insurance and left out in the cold — would very likely dominate our discussion for months. That leaves more than enough time to lead to significant repercussions in the 2018 midterm elections. With no Democratic leaders in any branch of government to blame, I think this would be akin to what happened in the 2010 elections, but in reverse.

The best time for such a disaster would be after Trump's hypothetical re-election in 2020, but that didn't work for George W. Bush and social security privatization.

 

Let's leave healthcare behind for the moment and talk infrastructure.  Details about Trump's infrastructure plan remain unclear but even in its hazy state, the plan is being dissected.  Paul Krugman raises some valid questions about Trump's infrastructure plan.  To wit: is it actually a plan to build new infrastructure, or is it a privatization scam?

Let me attempt to summarize Krugman's concerns.  First, if the government farms out infrastructure work to private contractors, to avoid taking on public debt, which is what Trump  has proposed, then all future revenue from tolls on public roads, bridges and tunnels will accrue to private contractors, not the government.  In brief, the government will not recoup the costs of the investment, unlike, say, the TARP bailout following the Great Recession, which ended up netting the government $15.3 billion.  This is not a concern, obviously, if your goal is to "starve the beast" of government, but is a concern if you want government to have skin in the game when it comes to infrastructure maintenance.

Secondly, and crucially, even with all the tax cuts in the world, why would private developers want to invest in infrastructure projects that won't return them a healthy profit?  Toll roads and hydroelectric works are one thing, but what about overhauling water and sewage systems?  This infrastructure work is needed, but isn't especially profitable.  It's an open question whether the miracle of the free market will work when it comes to building/renovating/maintaining such critical infrastructure.

Thirdly, and just as crucially, how much infrastructure to be built under the Trump plan will be "new," i.e., not previously planned?  This is where the potential for government giveaways come in.  If a tunnel beneath a river was in the works anyways, but now it is shifted from government construction to a private contractor who's been given a 82% tax cut, the government is in effect giving money away to a private contractor while no additional new infrastructure is being built.  It's welfare for construction companies, and it is unlikely to alter the number of new jobs that would be generated in anything other than marginal  way.

So will the Trump infrastructure plan deliver, or will it just shift taxpayer dollars over to private contractors without generating any new, substantive spending?  We'll find out.

Setting these concerns aside, there's also the question of whether the GOP will go for a $1 trillion infrastructure plan.  My gut tells me the answer is yes.  The GOP has never shied away from spending an ungodly amount when their man occupied the Oval Office.  Still, the GOP will at least give lip service to making the plan "pay for itself," and some very principled conservatives may end up opposing the whole thing:

“To just add it to the national debt, I don’t think President-elect Trump or members of the Republican Conference would support that,” said Rep. Mark Meadows (R-N.C.), a member of the House Transportation Committee and the conservative Freedom Caucus.

It's also possible that the GOP will not only authorize the infrastructure plan, they will use it as an excuse to pass a series of tax breaks under the guise of an "overhaul":

A trillion dollars is “a big number,” said Senate Commerce Chairman John Thune (R-S.D.), adding that a tax overhaul could be one promising way to pay for it. “I think it's going to come down to figuring out just actually what's achievable.”

There are also questions, among Democrats at least, about the realism of farming infrastructure work out to private contractors, as mentioned above:

Rep. Peter DeFazio of Oregon, the top Democrat on the Transportation Committee, said those partnerships won't do much for the 143,000 bridges that need work nationwide "unless you're going to toll 143,000 bridges." He said the same goes for the interstate highways "unless you're going to start massive tolling of already constructed infrastructure to reconstruct it."

It appears possible that gas taxes will be increased, a proposition that may have bipartisan support:

DeFazio said he would propose indexing the gasoline tax to inflation, so that the rate would rise over time, or implementing a wholesale barrel tax on oil. “If they want to put people to work quickly and they want a big bang in infrastructure, they need real money," he said.

At least one House Republican agrees: Former Transportation Chairman Don Young of Alaska said he would also hike the gas tax to pay for transportation projects, and he faulted both his own party and Obama for blocking it in past years.

“There’s no pie in the sky, no magic wand,” Young said. “We have to pay for it.”

We really won't know until the infrastructure plan is announced and put into effect how many people it will employ, how much legit new infrastructure (and what sort of infrastructure) will be built, and how much it might amount to a taxpayer giveaway to private contractors as opposed to an investment in our nation's future.

There's going to be more infrastructure talk in coming months.  For now, let's just say heil victory, and see you all tomorrow!

Education and Manufacturing Training

Everyone's all worked up about the Hamilton situation, which is too bad because it leaves opponents of Trump in the position of lionizing an elitist cultural institution which glorifies a central banker and supporters in Trump in the position of whining in a butt-hurt fashion.

But enough of that.  Today let's consider education.

Trump recently met with Michelle Rhee, a poster child for the school reform movement and former chancellor of the D.C. public school system.  Rhee will likely not be Trump's Education Secretary, as she has been deemed too soft on common core for the right wing.  Still, it's an interesting meeting, and perhaps may signal that President-elect Trump intends to continue the shift away from traditional public schooling that began under George W. Bush and Barack Obama, or perhaps be even more aggressive about the shift.  Money currently designated for low-income schools or low-income students might end up going to school vouchers instead:

American Federation of Teachers president Randi Weingarten believes Trump could bankroll his $20 billion school choice plan at the expense of Title I funds, which are federal dollars for low-income public schools, or from funding that helps low-income students pay for college, because those are the biggest pots of money.

Read more here: http://www.miamiherald.com/news/local/education/article114225223.html#storylink=cpy

The federal government controls less than ten percent of the funding for schools nationally (most funding is controlled at the state or school district level), though federal funding is crucial for schools located on Native American reservations and military bases, so if President-elect Trump decided to cut federal funding for schools, both Native Americans and our fighting forces could get the put over the barrel, which would be nothing new.  Still, if you're not a Native American or an active or veteran soldier, the impact of the Trump administration can have on your school district appears minor at first glance.

The modern Right is rather fixated on vouchers.  The evidence on school vouchers to date is mixed.  The idea that vouchers are a panacea for education failures may be wishful thinking, but there's no question there have been plenty of success stories.  On the other hand, you may hear in coming years about success stories such as the aptly named Success Academy, where the success in question may have come in part by booting trouble students, making them some other school's problem.  It is difficult to make sweeping statements either way.

Similar to what I posted about yesterday with regards to the Veterans Administration, the potential danger from "choice" (which sounds great, doesn't it? Hard to argue with "choice," in the abstract) is that once-quality systems that depend on mass participation will be undermined as participants leave, thus, in the end, denigrating their quality.

It's interesting to note that voters just rejected, in this past election, two pro-school choice referendums, one in blue Massachusetts and one in red Georgia.  It appears the mixed results of years of experiments with charters and vouchers have left parents of students apprehensive about abandoning public education.

Whatever course Trump chooses to pursue, he's unlikely to bother worrying about the feelings of the American Federation of Teachers and its President, Randi Weingarten, with whom he didn't bother to meet once during the campaign. 

If President-elect Trump wants to bring manufacturing back to the Rust Belt in particular, he's going to need to figure out how to generate a well-educated labor force, as a high school degree alone by and large will no longer cut it to obtain a manufacturing jobs.  Perhaps apprenticeships (see prior link) are the answer?  Or, perhaps, manufacturing employment, in large numbers, is not really coming back in this country, period.

There is much, much more to say about education, school choice, vouchers, charters, the AFT and industrial apprenticeships, but your blogger has a massive caffeine-induced headache and has to go watch some football men crash the hell into each other for a while.  I really hope I don't end up seeing anything like this today.  Have a wonderful weekend.

Veterans

Veterans Day was over a week ago, so please forgive me for being tardy in bringing up this subject.

There is talk that privatization of the Veterans Administration is on the table.  Here's a good, lively and fairly short debate on the topic, although the link above should also be perused if you have time.

Donald Trump is considering Jeff Miller to head the VA.  Miller has been a stern critic of the VA in recent years.  On the one hand, should privatization fix the problem of long wait times for veterans awaiting medical care, that would be a net positive.  On the other hand, should privatization destroy a system that is frequently held to be of a higher quality than most providers of healthcare, that would be a very bad thing for those who have fought for their country.  (It is worth noting that the quality of care provided by the VA varies widely by facility and that therefore sweeping comments either way about the quality of VA care need many qualifiers.)

Concerned Veterans for America, funded by the Koch brothers, advocates for privatization.  Other organizations are less sanguine about the prospect:

Large veterans service organizations and a nonpartisan commission that examined the issue have been less than enthusiastic about the prospect of widespread use of outside doctors, warning that the high cost could siphon so much money from veterans hospitals that they would soon become dysfunctional. (emphases added mine)

Veterans have suffered through a lot in the past decade and a half plus, and are well within their rights to feel aggrieved.  Many of them supported Donald Trump and might expect, rightfully, reform of the VA and more generous treatment in the modern social contract generally.

It turns out that during the campaign, Donald Trump had a 10-point plan for veterans.  It is worth considering point by point:

1. Appoint a VA Secretary whose sole purpose will be to serve veterans. Under a Trump Administration, the needs of D.C. bureaucrats will no longer be placed above those of our veterans.

Hard to argue with this.

2. Use the powers of the presidency to remove and discipline the federal employees and managers who have violated the public's trust and failed to carry out the duties on behalf of our veterans.

3. Ask that Congress pass legislation that empowers the Secretary of the VA to discipline or terminate any employee who has jeopardized the health, safety or well-being of a veteran.

Hard to argue with these points either.  Incompetents in any given organization should generally be dismissed, especially when they have violated the public trust.

4. Create a commission to investigate all the fraud, cover-ups, and wrong-doing that has taken place in the VA, and present these findings to Congress to spur legislative reform.

Certain Congressional inquiries have in the past been very effective at rooting out fraud.  Others have been deceitful and pointless.  So this one can go either way.

5. Protect and promote honest employees at the VA who highlight wrongdoing, and guarantee their jobs will be protected.

Ok.

6. Create a private White House hotline, which will be active 24 hours a day answered by a real person. It will be devoted to answering veteran's complaints of wrongdoing at the VA and ensure no complaints fall through the cracks.

Agreed, veterans deserve a real customer service representative and not some automated nonsense, as well as vigorous follow-through on their complaints.  I hope this comes to pass.

7. Stop giving bonuses to any VA employees who are wasting money, and start rewarding employees who seek to improve the VA's service, cut waste, and save lives.

Agreed, people who waste money should not be given bonuses.  This is true in the VA and in any organization.

8. Reform the visa system to ensure veterans are at the front of the line for health services, not the back.

What does this really mean?  Is Trump referring to an intention to require businesses to give veterans preferential treatment with regards to hiring?  If so, that's very hard to argue with.  But what does it have to do with the VA?  Anything?  It's fair to ask whether this point amounts to policy or is just a bunch of words that sound good.

9. Increase the number of mental health care professionals, and allow veteran's to be able to seek mental health care outside of the VA.

There are issues with "choice" leading to a dilution of the strength of the VA itself, discussed above.  However, the premise of increasing the number of mental health care professionals for the VA is a wonderful idea.  It would be nice to see mental health care become more accessible and affordable for all Americans, period.

10. Ensure every veteran has the choice to seek care at the VA or at a private service provider of their own choice. Under a Trump Administration, no veteran will die waiting for service.

Again, "choice" is discussed above.  If increased choice does not terminally cripple the VA, then it would, of course, be great for veterans.  If it does cripple the VA, it might mean that veterans get shoved off into the general American healthcare system, which is not good.

On the whole, it sounds like things could go either way for the VA in coming years.  Hopefully President-elect Trump will improve the situation of medical care for our veterans.  The recent track record of his party in this regard is not reassuring.  This summary does not mince words.  In the interest of balance, it should be noted that Democrats have played games with veterans' benefits before.

This is a complex topic and I hope I get the chance to return to it soon.  For now, if you're bored, here's a nice rundown of VA scandals past and present, or at least, fairly recent.  I won't pretend to have any insight into the mind of a veteran, but I certainly hope Donald Trump gets this issue right, as I hope he gets infrastructure right, foreign affairs, you name it.

We'll see!