My Free Speech Political Quotations and Commentaries Directory and Log ---
http://www.cs.trinity.edu/~rjensen/temp/Political/PoliticalQuotationsCommentaries.htm

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

Europe Is Just Entering 25 Years Of Stagnation
 George Soros --- http://www.businessinsider.com/soros-europes-25-years-of-stagnation-2014-3

"Fidel Castro is a genius!" said Jack Nicholson after a visit with El Lider Maximo that same year. "We spoke about everything," the actor rhapsodized. "Castro is a humanist. Cuba is simply a paradise!"
http://townhall.com/columnists/humbertofontova/2014/03/15/oliver-stones-most-vicious-insult-n1809305?utm_source=thdaily&utm_medium=email&utm_campaign=nl
Nicholson may have been aware that his Cuban hotel room was bugged by the Cuban military.

Two Christian women were publicly beheaded by Islamist terrorists in southeastern Somalia, as part of a campaign to “wipe out” any Christian presence in the east African country ---
http://www.israelnationalnews.com/News/News.aspx/178624#.UyjCT01vChM

Democracy is Wrong for the World and Belgium is a Test Case ---
http://www.cbn.com/tv/embedplayer.aspx?bcid=1509282970001

A Rare ACLU Victory Regarding Promotion Denial Due to Conservative Leanings
Victory for Academic Freedom: Jury Rules UNC-Wilmington Retaliated Against Conservative Professor ---
http://townhall.com/tipsheet/leahbarkoukis/2014/03/20/victory-for-academic-freedom-jury-rules-uncwilmington-retaliated-against-conservative-professor-n1812321?utm_source=thdaily&utm_medium=email&utm_campaign=nl

A jury in North Carolina on Thursday found that the University of North Carolina-Wilmington retaliated against criminology professor Dr. Mike Adams for his political and social views.

Adams, a Townhall columnist, explained last year that despite his track record of success at the university in terms of teaching, research and service, he was denied a promotion to full professor because of the views he advanced in his opinion columns. He described the promotion process as being “replete with procedural irregularities and with direct criticism of [his] columns and [his] beliefs.”

The ACLU, who represented Adams along with Alliance Defending Freedom attorney Travis Barham, explains further:

 

When Dr. Adams submitted his application for full professor, university officials rejected it through the use of a completely-fabricated promotion standard, passed along false and misleading information about his academic record, explicitly considered the content of his protected speech in promotion documents, and – incredibly – allowed a professor who’d filed a false criminal complaint against Dr. Adams to cast a vote against his application.

“[N]o individual loses his ability to speak as a private citizen by virtue of public employment,” the U.S. Court of Appeals for the 4^th Circuit wrote in 2011. “Adams’ columns addressed topics such as academic freedom, civil rights, campus culture, sex, feminism, abortion, homosexuality, religion, and morality. Such topics plainly touched on issues of public, rather than private, concern.”

The university hired Adams, a former atheist, in 1993 as an assistant professor, and promoted him to associate professor in 1998. The “campaign of academic persecution that culminated in his denial of promotion to full professor” began when he converted to Christianity in 2000, which greatly influenced his views on social and political issues.

Continued in article

Jensen Comment
This is very surprising since the courts rarely intervene in promotion- and tenure-related decisions except when civil rights are violated.  Court awards for illegal bias in hiring is a bit more common. One such hiring discrimination regarding denial of appointment to a conservative law faculty applicant at the University is now pending before the U.S. Supreme Court.  When this adjunct was a tenure track employment the University of Iowa law school had 48 Democrats, one Republican, and one independent. Since this went to court, this program hired a new conservative.

The amount of compensation for damages has not yet been decided as of March 21, 2014. Usually the awards are monetary since the courts are hesitant to force a college to hire, promote, or grant tenure to the damaged candidate.

What is somewhat unique is for the notoriously-liberal ACLU to take on a conservatism case. But there is precedent such as a victory years ago when the ACLU defended the right of the Nazi Party in the USA to demonstrate.

Bob Jensen's threads on significant liberal bias in higher education ---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#LiberalBias

The Hidden Rot in the Jobs Numbers
Hours worked are declining, resulting in the equivalent of a net loss of 100,000 jobs since September ---
http://online.wsj.com/news/articles/SB10001424052702304250204579433442474053878?mod=djemBestOfTheWeb_h&mg=reno64-wsj

Question
How do admissions gate controllers distinguish between tens of millions of applicants who all graduated from high school summa cum laude due to the epidemic of grade inflation?

Problem
Nearly all graduates in NYC have A or B grade averages mostly because teachers are paid on the basis of student academic performance. Are most of these graduates prepared for Harvard? Are many of these high performing graduates still in need of much remedial work in reading and arithmetic.

Double Problem
If they get into Harvard they will continue to get A or B grades since grade inflation at Harvard is worse than in NYC public schools ---
http://www.trinity.edu/rjensen/Assess.htm#RateMyProfessor

Solution
For graduates who become varsity athletes at the University of North Carolina they will become great readers since, due to recent scandals, UNC will offer varsity athletes world-class resources on how to read better than Harvard graduates.

From the Director of Elite Education in San Frnacisco:  Dumbing Down the SAT
"Randolf Arguelles: The New SAT Will Widen the Education Gap Everyone who takes the test is measured against the same yardstick. That's not true of high school grades," by Randolf Arguelles, The Wall Street Journal, March 11, 2014 ---
http://online.wsj.com/news/articles/SB10001424052702304704504579429493504786468?mod=djemMER_h&mg=reno64-wsj

The College Board's March 5 announcement that the SAT college-admissions exam will undergo a significant overhaul in 2016 has generated no shortage of commentary, some of it praising the changes as a "democratization" of the test. The College Board says it is expanding its outreach to low-income students and shifting from testing abstract-reasoning skills to evidence-based reading, writing and mathematical skills acquired in high school. Ultimately, the exam will look a lot more like the ACT, which has been taking away the SAT's market share in recent years.

The goal, according to College Board President and CEO David Coleman, is to combat the advantages some students gain by costly test-preparation. His message for students was that "we hope you breathe a sigh of relief that this exam will be focused, useful, open, clear and aligned with the work you will do throughout high school."

Despite this intention, and the fact that low-income students will have the $51 test fee waived, I suspect the new SAT will widen, not narrow, the education gap in the United States.

As someone who has worked for the past eight years as a reader of freshman applications to the University of California at Berkeley, and as the director of an SAT-preparation center, I know that a score on the SAT or ACT is the only data point that is an apples-to-apples comparison. An A in AP Chemistry at one school can be easier or harder to attain than at another. Serving as president of the Speech and Debate Club might entail vastly different responsibilities from one school to the next. And what about the essays that students write for their college applications? How can college admissions officers fairly compare those, given the varying levels of parental or other editorial assistance?

While the question of what the SAT measures is still an open one—it almost certainly does not measure native intelligence, or the ability to do well in college classes—everyone who takes it is being measured against the same yardstick. That comparison is extremely useful in college admissions.

It's notable that those who wish to see the SAT drastically altered or disappear as a college-admissions requirement do not work for colleges or universities with a large number of applicants. Leon Botstein, the president of Bard College (5,760 applicants for the freshman class of 500 for fall 2013), wrote last week in Time magazine that the SAT "needs to be abandoned and replaced," calling it "part hoax and part fraud."

In lieu of standardized-test scores, Bard College promotes an innovative online essay exam. That's great for Bard College, but UCLA received 80,522 freshmen applications in fall 2013. Imagine if UCLA's admissions staff had to read 80,522 analytical essays in time to notify students of the school's admissions decision by March. It wouldn't be possible.

It should also concern us that the College Board says the new SAT will more accurately reflect how well students are learning in their high-school classrooms. Even the most sanguine education observers acknowledge the inherent inequality in curriculum and pedagogy among the nation's high schools. As a measure of academic skills derived from classroom curriculum and teachers, the new SAT will amplify, not bridge, the education gap between well-resourced suburban and poorly resourced inner-city public schools.

As a tool for making higher education accessible to all students regardless of incomes, the old format of the SAT was more effective. When SAT debuted in 1926, it was based largely on IQ tests from World War I. Until the College Board's announcement last week, the SAT had retained the puzzle-solving characteristic that is the hallmark of intelligence tests on which it was based.

In that respect the old SAT was a more equitable means of rating college applicants. To do well on the old SAT, it didn't matter so much if you had an excellent history teacher who taught you how to analyze primary source documents. All that mattered was that you had a strong vocabulary, could make valid inferences from a given text, and could utilize foundational math concepts to solve the logic games that typified the old SAT math section.

Defenders of the new SAT will point out that, in addition to the fee waiver for the test, Khan Academy, the free online tutoring service, has been contracted by the College Board to offer free prep for SAT test-takers. Khan Academy has done great work, but free online and in-person tutoring for underperforming students has been around for a long time, most notably as part of President Bush's No Child Left Behind program. I think it's safe to say that free tutoring has not managed to level the playing field between students from disadvantaged and affluent schools.

Democratizing access to higher education in the U.S. is a noble goal, but the new SAT will further highlight the disparities between the haves and have-nots.

Mr. Arguelles is the director of Elite Education of San Francisco.

"Detroit Homestead Act:   Michigan's Governor wants to repopulate the city with immigrants," The Wall Street Journal, March 14, 2014 ---
http://online.wsj.com/news/articles/SB10001424052702303795904579431523594192390?mod=djemMER_h&mg=reno64-wsj

. . .

This is where Mr. Snyder's plan would help. The Republican has proposed assigning 50,000 EB-2 visas (i.e., employer-based green cards) over five years to high-skilled immigrants who volunteer to work and live in Detroit. He also suggests giving these immigrants a "national interest waiver" that allows them to bypass Department of Labor certification. This would reduce the bureaucratic headaches and attorneys' fees of employing foreign workers.

The Department of Homeland Security has wide discretion over waivers. According to the U.S. Citizenship and Immigration Services, "national interest waivers are usually granted to those who have exceptional ability and whose employment in the United States would greatly benefit the nation." Foreign doctors who agree to serve poor communities usually make the cut. Arguably though, all high-skilled immigrants should get waivers given their outsize economic contributions.

Consider: Immigrants file patents at twice the rate of U.S. born citizens and have been behind nearly one-third of Michigan's high-tech startups over the last decade. According to a study last year by the National Foundation for American Policy, one-third of U.S. venture-backed businesses between 2006 and 2012 were started by foreigners. The American Enterprise Institute and the Partnership for a New American Economy estimate that each foreign worker with an advanced U.S. degree helps create 2.6 jobs for American workers. Detroit could desperately use this brain power and energy.

Jensen Questions
How long can immigrants be "forced" to remain in Detroit after they get into the country?

Will sham marriages circumvent a "remain in Detroit" mandate where two skilled immigrants enter into a sham marriage where only one remains in Detroit and the more highly skilled immigrant leaves a Detroit job and moves elsewhere in the USA while still pretending to be a "spouse"? in name only?

Will undocumented immigrants already in Texas use this as a ploy to get green cards by pretending to live with relatives outside the USA?

Will they be required to have jobs before getting their green cards? It would seem that Detroit must have jobs available to keep them from going on long-term welfare like the many Somali immigrants in Lewiston, Maine remain year-after-year on welfare. A huge problem is that Lewison just does not have enough jobs to offer to these Somali immigrants that the government relocated in Lewiston because of cheap housing in a decaying mill town. Will job opportunities be a whole lot better in a decaying Detroit?

This could give rise to scams where an uncle in Detroit gives jobs to 25 relatives just to get them inside the USA and then forces them to seek jobs elsewhere since he cannot afford to have all of them on his payroll?

If they are really skilled they can probably get Visa's without having to move live in Detroit such that the ones choosing the Detroit option may be marginally "skilled."

Life gets complicated.

"A Tax Break Worthy of Bipartisan Cheers," by Alan S. Blinder, The Wall Street Journal, March 12, 2014 ---
http://online.wsj.com/news/articles/SB10001424052702304704504579429252124914572?mod=djemMER_h&mg=reno64-wsj

. . .

The president proposes to make the Earned Income Tax Credit, a kind of wage subsidy for low-wage workers, more generous—especially for workers without children, who now gain little from the credit. To understand his proposal, let's review how the EITC works currently for a married wage earner with one child. We'll call her Jane.

The tax credit comes and goes in three stages: the phase-in, the plateau and the phase-out. In the phase-in stage, as Jane's annual earnings rise from zero to $9,720, the EITC reduces her tax bill by 34 cents for each additional dollar she earns. Thus, if her employer pays $10 an hour, Jane nets $13.40 for each additional hour worked—providing a financial incentive to work more. The credit stops increasing at $3,305 a year—which happens when her earnings reach $9,720 a year—and then remains on this plateau until her earnings reach $23,260 (less if Jane is single). The credit then begins to phase out—at 16 cents for every $1 earned. The tax credit would be entirely gone when Jane's earnings reach $43,941 a year. Notice that the EITC actually creates a disincentive to work more in the phase-out range by raising Jane's effective tax rate.

Continued in article

Jensen Comment
The EITC was enacted primarily as an added incentive for a parent on welfare to go off of welfare, particularly in high paying welfare states like Vermont where it is often better to be on welfare than have a job.

Extending the EITC to people who have no children is simply a wage supplement funded at taxpayer expense. It does not do a thing for unemployed people.

There are better uses for such taxpayer spending --- such as more subsidies for childcare of working parents.

This could affect non-partner employees of CPA firms and managers of such things as restaurants and hotels
From the CPA Newsletter on March 12, 2014

Jensen Comment
This is not all good news for employees on bonus plans and profit sharing plans. Overtime pay could eliminate such plans that are often more lucrative in offices or stores having very profitable years. Firms usually pay what it takes to keep their best employees with or without government mandates.

It could also affect customer services if offices cut back on service hours such as elimination of Saturday openings or late afternoon services.

In any case it seems to me that this is a really big deal in the economy that should not be left to one person even if he or she is the President of the USA. I would object to this on principle if I were a member on Congress.

I wonder if this mandate will end up in the Supreme Court if firms like that are hit hard by the ruling want to carry it this far.

GAO: Fiscal Outlook & The Debt --- http://www.gao.gov/fiscal_outlook/overview

"Sliding Away:   Barack Obama’s failure to control entitlement spending puts his good ideas at risk," The Economist, March 8-14, 2014, Page 30 ---
http://www.economist.com/news/united-states/21598685-barack-obamas-failure-control-entitlement-spending-puts-his-good-ideas-risk-sliding

. . .

To tackle poverty and joblessness, Mr Obama would expand the Earned Income Tax Credit (EITC), a subsidy for low-paid workers. Because it boosts pay (by up to $1,000 a year) without raising firms’ hiring costs, it should encourage work and hiring. It is costly: the tax credit bill is already $78 billion a year. But more and better jobs will cut other bills, like the $80 billion America spent on food stamps in 2013.

Tilting taxes to boost growth is one of the president’s main ideas. His blueprint would make breaks for innovative firms permanent and more generous: the “Research and Experimentation” tax credit would rise from 14% to 17%. He would also fund more basic research—the cutting-edge stuff that lab-based boffins do. Both these steps please economists: more new ideas should boost productivity and wages.

Bound by the December spending deal, each of Mr Obama’s payouts is twinned with a revenue-raiser. Tax credits for the poor would be funded by closing loopholes used by the rich. American firms, if the president had his way, would be prevented from shifting profits overseas to avoid the taxman. Another priority, pre-school for all four-year-olds, would cost $75 billion over ten years. That cash would come from a long-promised rise in cigarette taxes. Still, despite a progressive tax code and all Mr Obama’s talk of promoting equality, America still redistributes less than most other rich countries. Both Britain and Luxembourg—hardly hellish places for bankers—shift more income from rich to poor (see chart 1).

Mr Obama wants to boost spending on things that enhance growth in the long term, such as science and roads and schools. This “discretionary” category accounted for just 15% of spending in 2013. It could be squeezed painfully if any of the “mandatory” parts of the budget—such as transfers to the old and debt payments—unexpectedly grow. That is not something to bet against (see chart 2). The health entitlements that old and poor Americans receive—Medicare and Medicaid—have shot up in recent years, rising from 11% of outlays in 1990 to 21% by 2007. Since then their growth has slowed; Mr Obama’s plans, which would raise more revenue from drug firms and through higher fees for patients, aim to keep public outlays under control. But that has always been hard.

Social Security, which pays pensions and disability benefits, is just as worrying. It paid out $808 billion in 2013—more than Medicare and Medicaid combined—and will grow as America ages. Interest payments, already equal to four-fifths of Medicaid outlays, are expected to soar from $221 billion in 2013 to $827 billion in 2023. According to Mr Obama’s forecasts these rises will not be a problem, since robust growth will create a primary surplus by 2018. But, given America’s performance to date, that seems optimistic (see chart 3).

Mr Obama’s presidency may turn out to be a lost opportunity, says Maya MacGuineas of the Committee for a Responsible Federal Budget, a think-tank. As the leader of the party seen as more protective of entitlement programmes, he could have led a bipartisan reform of them. Instead, his budget promises the opposite, scrapping a new inflation-index that would have slowed the growth of outlays. If both parties could work together on phased cuts, reform would be much less painful, says Ms MacGuineas; if they do not, future cuts to social budgets may have to be much sharper. Mr Obama may face a double failure: watching his pro-growth policies slide out of reach, and leaving his successor with an entitlements black hole.

"The GDP in 2017 Is Not Looking Good," by Brendan Greeley and Matthew Philips, Bloomberg Businessweek, March 6, 2014 ---
http://www.businessweek.com/articles/2014-03-06/u-dot-s-dot-potential-gdp-revised-downward-as-recession-damage-lingers

One of the many statistics that economists pore over for clues to future economic performance is potential output, also known as potential gross domestic product. This is a measure not of what the economy is doing, but what it could be doing: an estimate of the maximum amount of GDP the economy can achieve over a sustained period if it’s operating at close to full employment, using all its resources. Any lower, and the economy isn’t working up to its potential. Any higher, and it runs a greater risk of inflation. To help guide policy, economists forecast the output gap—the difference between potential and actual GDP—for years into the future.

On Feb. 28, the Congressional Budget Office revised an estimate for potential GDP for 2017 that it had made in 2007. The new estimate is 7.3 percent lower than the original forecast. This downward revision wipes out $1.5 trillion of potential output, according to Andrew Fieldhouse, fellow at the Century Foundation, a think tank. So instead of forecasting a potential GDP of almost $20.7 trillion, the CBO predicts potential output closer to $19.2 trillion. For years economists have been expecting too much from the economy.

That matters because the size of the output gap can influence policy. A large gap leaves too many people unemployed and tempts policymakers to try fiscal or monetary stimulus. Closing a smaller gap is harder, because it increases the risk of overshooting on stimulus and sparking inflation. It’s even more difficult to raise potential GDP. Education can increase productivity, but that takes years. Technological revolutions can boost potential; those, however, are rare.

Continued in article

Jensen Comment
President Hillary Clinton may inherit a mess with a busted economy, a busted deficit that's predicted by the Congressional Budget Office to soar in 2016.  and a busted ACA health insurance program. To make matters worse, MSNBC's Chris Matthews is now predicting the GOP will take back the Senate. I'm not sure he really means it. This is probably just one of his many scare tactics.

Ironically, Senate and House Democratic wins in the Senate and House depend upon a tight presidential race that will bring more voters to the polls. If Hillary is predicted to win by a landslide, many young and poor Democrats may not bother to vote --- which probably gives the emotional Chris Matterws nightmares.

What's are the probability of a tight Presidential race in 2016? Maybe 1%-2% --- but only if Hillary decides not to run.

Sweden --- http://en.wikipedia.org/wiki/Sweden

Is it Time to Follow Sweden’s Lead on Fiscal Policy? ---
http://danieljmitchell.wordpress.com/2012/04/15/time-to-follow-swedens-lead-on-fiscal-policy/

 Sweden has a very large and expensive welfare state, but it’s actually becoming a bit of a role model for economic reform. I’ve already commented on the country’s impressive school choice system and noted that the Swedes have partially privatized their Social Security system.

[Daniel Mitchell] wrote a Cato study looking at the good and bad features of economic policy in the Nordic nations, and cited a Swedish parliamentarian who explained that his nation became rich because of small government and free markets and how he is hopeful his country is returning to its libertarian roots.

Notwithstanding the many admirable features of Sweden, I [Daniel Mitchell] never thought they would be moving in the right direction on fiscal policy while the United States was heading in the opposite direction.

Yet that’s the case. We all know that America has had made many mistakes during the Bush-Obama years, particularly with failed stimulus schemes in 2008 and 2009.

Sweden, by contrast, has put in place pro-growth reforms. Here’s what Fraser Nelson wrote for the UK-based Spectator.

When Europe’s finance ministers meet for a group photo, it’s easy to spot the rebel — Anders Borg has a ponytail and earring. What actually marks him out, though, is how he responded to the crash. While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. …Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. …‘Everybody was told “stimulus, stimulus, stimulus”,’ he says — referring to the EU, IMF and the alphabet soup of agencies urging a global, debt-fuelled spending splurge. Borg, an economist, couldn’t work out how this would help. ‘It was surprising that Europe, given what we experienced in the 1970s and 80s with structural unemployment, believed that short-term Keynesianism could solve the problem.’ …He continued to cut taxes and cut welfare-spending to pay for it; he even cut property taxes for the rich to lure entrepreneurs back to Sweden. The last bit was the most unpopular, but for Borg, economic recovery starts with entrepreneurs. If cutting taxes for the rich encouraged risk-taking, then it had to be done.

The article notes that government is still far too large in Sweden, but it’s also clear that moving in the right direction generates immediate benefits.

Continued in article

Update on March 13, 2014 ---
http://finance.townhall.com/columnists/danieljmitchell/2014/03/13/sweden-spending-restraint-and-the-benefits-of-obeying-fiscal-policys-golden-rule-n1808245

Jensen Comment
There are always complications when comparing fiscal spending and benefits of any two nations. For example, there are enormous differences between having a  10 million relatively homogeneous population and a 300 million highly diverse population. Sweden has much more restrictive immigration and does not face the advantages and disadvantages of illegal immigration. Sweden spends relatively little on its military whereas the USA funds the world's most powerful global military force that consumes nearly 20% of the Federal budget. Sweden has proportionately much less crime and incarceration expense. All of this adds to a greater proportion of taxes that can be spent on such things as health care and education.

Sweden now recognizes the importance of reducing the marginal tax rate at the highest levels as an incentive for innovation and economic growth.

Still there are ideas that appeal to me in the fiscal policies of Sweden that I think the USA should consider.

Faustian Pact (Deal With the Devil) --- http://en.wikipedia.org/wiki/Faustian_Pact

Jensen Comment
Watson's Book Sounds Too Arcane for my Brain
When doing away with underlying assumptions brings in new underlying assumptions and on and on and on.
I do like books, however, that challenge what I view are absurd assumptions of equilibrium.

"The intolerance of uneconomic economics," by Alex Marsh, Pieria, February 18, 2014 ---
http://www.pieria.co.uk/articles/the_intolerance_of_uneconomic_economics

Over the last couple of days two of the big beasts of the economics blogosphere have offered views on a question of considerable significance for the field of macroeconomics.

On Friday Simon Wren-Lewis discussed whether New Keynesians made a Faustian pact when they decided to engage new classical economists on their own modelling territory. He concludes that New Keynesians were not compelled against their will to adopt modelling devices such as rational expectations and inter-temporal optimisation at the individual level. These modelling techniques were perceived as an improvement on existing practice. But it may nonetheless have turned out in retrospect to have been a strategy that carried significant costs. New Keynesians may be less able to shed light on fast moving events in the real world than they might otherwise have been.

. . .

But Watson’s main target is not the exotica of the financial markets. It is the deficiencies of general equilibrium theorizing and, to a lesser extent, the efficient market hypothesis. He sees the 4th edition of Walras’ masterpiece Elements of Pure Economics as a turning point in the history of economic thought. With the 4th edition Walras gave up on economic economics – trying to explain how the vagaries of markets in the real world might co-ordinate behaviour – and retreated into uneconomic economics by postulating the mythical auctioneer to resolve the co-ordination problem. That was a failure of Walras’ intellectual project. Yet it was hailed as a great achievement by those who came later.

The second key milestone is, of course, Arrow-Debreu. It may be a mighty mathematical achievement, but Watson argues that this is where macroeconomics fully embraces uneconomic economics. The models cease to be rooted in anything distinctively economic and the ‘economic’ content is merely a case of applying ‘economic’ labels to generic variables. The gain in mathematical precision comes as a cost of being emptied of real content.

Watson then goes on to note that this is not a problem that is unknown in the field. Since the S-M-D critique of the 1970s it has been known that general equilibrium theory is, at its heart, highly problematic in theory, let alone as an account of any sort of actually existing economy.

The core of the problem with macroeconomic theorising, for Watson, would appear to be two-fold.

The first, more fundamental problem is the reliance upon the assumption of probabilistic risk that conforms to a normal distribution and the assumption that the economy is an ergodic process. Watson favours the recognition that economic processes are non-ergodic, do not conform neatly to normal distributions, and are subject to genuine uncertainty (of the Keynesian/Knightian type, although he doesn’t label it as such).

The second problem is the location of the concept of equilibrium at the heart of macroeconomic theorising. The point here is not so much that the real-world economy can never be in equilibrium. Rather the problem is starting the analysis from the modelling assumption that it is in equilibrium.

The field may now be operating with Dynamic Stochastic General Equilibrium models. But DSGE models are afflicted just as badly as earlier generations of models with these problems.

Watson argues that these assumptions discipline the analysis in ways that exclude all sorts of possibilities. Economists working from within this framework simply cannot see certain characteristics of real-world economy, and nor are some types of action thinkable. In particular, the assumption of equilibrium, coupled with rational expectations, lies at the heart of the new classical critique of policy intervention. Even though the empirical support for the policy ineffectiveness thesis is, at the very least, contestable.

Watson frames his analysis of the status of equilibrium in terms of the Kuhnian idea of an exemplar. It is welcome to see an analysis of economic thought reforging the connection with ideas from the literature on the history and philosophy of science. That’s the sort of thing that used to happen in economics departments, but does so much less frequently these days. Indeed, another strand of Watson’s argument is about the way the institutional structures of the economics discipline – in the UK at least – have acted to narrow the range of voices and approaches seen as acceptable. Rather than pluralism being celebrated, the incentive structures mean heterodoxy has been marginalised or eradicated. He is acutely aware, unlike some other critics of the discipline, that simply calling for greater pluralism is unlikely to have much effect when we may well be locked-in to a path that leads to an equilibrium sustaining an “intellectual monoculture”.

Here the sort of distinctions that Wren-Lewis and Krugman would draw between New Keynesian and new classical approaches – saltwater or freshwater – do not register in Watson’s analysis. The differences between the two schools are pretty insignificant when viewed from a perspective that queries many of the foundational assumptions that the approaches share. It is all ‘orthodox equilibrium economics’, with or without sticky prices. Watson’s aspirations are for something rather different – a more clearly historically and institutionally-embedded “economic economics”. But the totemic status of formalism stands in the way of that aspiration being realized.

As I said above, I have a lot of sympathy for the overall objective of Watson’s project. But ultimately I came away from Uneconomic economics wondering what its target was.

Many of his arguments against general equilibrium theory, for example, are relatively well-trodden ground, among those who have studied the methodology of economics at least. I am pretty sure that the ‘dirty secret’ at the heart of general equilibrium analysis could do with being exposed more widely. But Watson’s treatment of the arguments is relatively concise and, quite possibly, only comprehensible to those who already know the story. If the aim is to recruit new converts to the cause then I’m not entirely sure it will succeed.

And if Watson wanted to take that sort of modelling approach apart then there is much more to be said. For example, we could argue that the main reason that DSGE models failed to see the global financial crisis coming was not so much a commitment to equilibrium but that prior to 2007 few thought it essential to explicitly model the financial sector. So the models were incapable of generating the sort of crisis dynamics subsequently observed. And he doesn’t really explore the use of the fiction of the representative agent to “overcome” aggregation problems. These aspects of the approach are, arguably, just as problematic. The rational expectations assumption itself is, of course, equally debatable. These assumptions are just as likely to be driven by modellers prioritizing formal analysis that can deliver precise results, even if those results have limited resonance with events in the real world.

The target of Watson’s critique could also have been sharpened up a little. Much – indeed most – of economics is not macroeconomics. And much of what goes on is seeking to build beyond the models of perfect competition that Watson, quite rightly, questions. Models of imperfect competition have been popular for quite a while. Much contemporary analysis is taking the insights of behavioural economics seriously. Applied economics that grapples with the data and seeks policy relevance is very much in vogue. Economists are seriously interested in institutions, altruism, reciprocity and all sorts of other things that non-economists assume they ignore. Those who focus on public economics typically have market failures coming out of their ears.

It is undoubtedly a very important point that a lot of this activity has not (yet) been folded back into a reworking of the sort of analysis that delivered the fundamental theorems of welfare economics. Indeed, it may not be possible to do so because it all becomes too messy. But that isn’t quite the point that Watson is making. Or at least not in so many words.

I wouldn’t for a moment argue that contemporary economic analysis has dealt satisfactorily with the problems Watson identifies. But I’m not sure it is all quite as benighted as he implies with his somewhat undifferentiated critique of  “simple demand-and-supply” orthodoxy.

Watson’s preoccupation is with the economic ideas that have allowed new markets to be created or governments to deny themselves the power to act. The analysis therefore, almost inevitably, has a strong idealist flavour. MacKenzie’s work has been criticised for ignoring the broader social forces and material interests in play in acting on economic ideas. Watson refers to those who seek to make the link to the interests served by promoting particular ideas, but a similar accusation of idealism might be levelled at his argument.

The analysis could do with a stronger institutional embedding. How do the economic ideas find their way into policy? Indeed, is it the economic ideas that you find in the academic journals that have leverage over policy? It may well be that specific high profile economists have acted as policy entrepreneurs for particular ideas. But that is not quite the same point. Are they always speaking qua “scientists”? Clearly not. For if they were committed to maintaining a scientific persona then, equipped with models that can offer no guidance, they should remain mute in the face of a crisis they cannot explain.

Of course, it may be that Watson will be seeking to develop these connections during the remainder of his project.

Finally, one thing I missed in Watson’s analysis is the recognition that he is one of a number of fellow travellers. There has been quite a lot of recent interest, in the UK and elsewhere, in student movements agitating for changes in the economics curriculum. A number of student societies are now offering opportunities to non-orthodox thinkers to articulate their ideas, sometimes in direct opposition to the orthodoxy. There are moves to develop new, more rounded and pluralist curricula for economics undergraduate degrees. There are initiatives to try to reintroduce history of economic thought, philosophy, methodology, and economic history – possibly even to teach the subject in an explicitly pluralist fashion.

Some would condemn these moves as inadequate. No one would doubt that considerable barriers stand in the way of their progress. The intellectual capital invested in the orthodoxy is immense.

Watson’s analysis can draw strength from the fact that it is one among an increasing number of voices, coming from very different points on the analytical spectrum, calling for change. They would all like to believe the centre cannot hold.

I enjoyed Watson’s book. I have a few reservations about parts of the argument. And it felt to me like it could have been left to simmer for a little while longer before publishing – a bit more crafting to make sure the story is being told as clearly as possible. But leaving that to one side, I thought it was trying to do something important.

The book deals with an arcane topic. But it is a topic of the utmost practical significance. These are ideas that shape the lives of every one of us, whether we know it or not. They require greater scrutiny and a reality check from beyond the ranks of the initiated. This book should perhaps best be thought of as valuable as a propaedeutic. And it will hopefully encourage some readers to probe more deeply.

From the CFO Journal's Morning Ledger on March 21, 2014

Bernie Madoff speaks: politics, remorse and Wall Street
Politico pays Mr. Bernard Lawrence Madoff a visit: a million metaphorical miles away from his old seven-room duplex in Manhattan, at his eight by 10 shared cell at Butner Correctional Facility, North Carolina. In the ultimate form of sensory deprivation for a man used to handling millions of dollars in the past, there are notices stuck to vending machines around the premises warning: “inmates are not allowed to handle money.” Highlights of the three-hour interview with Politico’s MJ Lee include details Madoff gives of the constant fundraising solicitations received from politicians and criticism of President Obama – whom Madoff says he did vote for the year before he was convicted. He also warned that there are “bad players like myself” currently getting away with their own Ponzi schemes, as he spoke.

Jensen Comment
Bob Jensen's thread on the land of Ponzi frauds where Bernie Madoff was once a king ---
http://www.trinity.edu/rjensen/FraudRotten.htm#Ponzi

Innovation District --- http://www.innovationdistrict.org/ 

The Innovation District is Mayor Thomas M. Menino’s initiative to transform 1,000 acres of the South Boston waterfront into an urban environment that fosters innovation, collaboration, and entrepreneurship. From a tech meetup at a coworking space to an art exhibition opening, to the launch of a new start-up or a special chef’s event at a local restaurant, the Innovation District is expanding quickly.

The Innovation District is nestled between Boston’s transportation gateways: abutting historic Boston Harbor, adjacent to Logan International Airport, and at the nexus of two major interstate highways.  It also contains the largest tract of underdeveloped land in the city of Boston, and is an area with opportunity for growth, a strong existing knowledge base, and the ideal location for producing new ideas, new services and new products.

In the three years since the initiative began, the area has grown rapidly. The growth is spread across a diverse range of companies in different sectors and at different scales. Here are selected highlights of all we’ve accomplished in just a few short years:

New Jobs
- Added over 5,000 new jobs in over 200 new companies
- Technology companies have contributed 30% of new job growth
- 21% of new jobs are in creative industries like design and advertising
- Greentech + life sciences are growing, with 16% of new jobs in these sectors

New Companies
- Of the new companies, 11% are in the education and non-profit sectors
- 40% of new companies are sharing space in co-working spaces and incubators
- 25% of new companies are small scale, with 10 employees or fewer

…And More on the Way!
Many other companies have announced plans to join the Innovation District community, and will add another 4000+ jobs to the neighborhood.

Jensen Comment
What works in Boston (or San Francisco) may be somewhat unique. If it works in Boston (or San Francisco) it may not work as well in Chicago, San Antonio, St. Louis, New Orleans, Albany, etc.. One of the things that makes Boston unique is the high concentration of world class universities where startups are seeking to locate in the first place for various reasons, including a high-tech labor force.

It can be taken further with temporary tax abatements such as those now being granted around universities in New York. Tax abatements work better for companies that are making taxable income. Most of the high tech startups aren't giving much thought to tax abatements when they are not yet making any profits. New York should have perhaps given more thought to rent subsidies and land purchase deals.

Having said this, I think innovation districts are worth considering for most any cities even though expectations may be different than expectations in Boston.

Question
What USA states have the highest proportions of revenue coming from Santa Claus in Washington DC?

Hint
They're not what we've come to think of as Blue States?

Where is the States' Pot of Gold? --- http://www.statedatalab.org/chart_of_the_day/fcdetail/where-is-the-states-pot-of-gold

March 14, 2014 - The St. Patrick’s Day leprechaun is always searching for a pot of gold.  Many states have found their pots of gold in Washington D.C. 

Truth in Accounting has identified Alabama, Missouri, New Mexico, Mississippi, and Louisiana as "gold digger" states.  These states have the highest portion of their total revenue coming from the federal government.  As the chart above shows, these states have dug into the federal pot of gold more and more each year.

These five ‘gold digger’ states need a lot of money.  After considering money the states have available, Truth in Accounting has calculated the amount they need to cover their bills.  Alabama needs $17.3 billion, Missouri - $8.3 billion, New Mexico - $7.7 billion, Mississippi -$7.4 billion and Louisiana - $18.3 billion.  Their bills include large, and mostly hidden, debt related to employee pensions.

How much longer will these states be able to use the federal pot of gold to solve their financial woes?  READ

Home of the Free --- http://www.staged.com/video?v=Klmb

Let me state at the very beginning that I'm in favor of nationalized health care. Between 2008 and 2010 the Democrats had substantial majorities in the House and Senate and an enormously popular President Obama could've legislated nationalized health care without any help from a single Republican. Instead the Democrats  blew it and gave birth to an abomination that is yet another unfunded entitlement nail in the coffin of the United States.

I like Germany's combination of public and private health insurance system for a number of reasons, including the fact that it like the health plans of most other nations is a pay-as-you go plan.
Health Insurance in Germany --- http://www.toytowngermany.com/wiki/Health_insurance

Don't confuse wanting a government-managed health care system like the one in Germany with the private insurance company rip off in the ACA in the USA where insurance companies have guaranteed profits while shifting the bad debts to the doctors and hospitals.

To add pain to misery these ACA insurance companies are offering over-priced policies with enormous deductibles that discourage patients from having medial treatments except in emergencies.

Hopefully, President Hillary Clinton will have the courage to reduce for-profit insurance companies to offer only supplemental elective plans like they do in Germany and for Medicare in the USA.

I vote for the German system that operates a lot like Medicare for all ages of citizens but with better fraud controls. I used to lean toward the Canadian system, but it's elective medical procedure delays for new hips, knees, and shoulders forces too many Canadians to pay cash for such procedures in the USA. when they grow weary of waiting out Canadian health plan approval.

What bothers me the most are the blatant lies our leaders broadcast to voters just to get a health care bill passed. I would be much less critical if they had flat out been honest about what they really intend for this legislation to cost. One example of a political lie is that Cadillac insurance plans will be taxed. The unions didn't object very loudly because they know full well that by 2018 when the tax is supposed to commence, Congress will have repealed all or most of the Cadillac tax.  The same is true with many other provisions of the legislation that can be altered at taxpayer expense. Also our leaders promised that nearly a half trillion dollars will be saved by reducing third party payments to physicians. But those projections are easily altered if physicians truly demand higher reimbursements.

I just wish that Congress had passed a pay-as-you-go tax as part of this legislation, where people at all levels of income and wealth pay their fair share of the health benefits they receive. Middle class America should foot their own bills for health care through substantial tax increases on the middle class.

Leading ACA Act Blogs ---
http://www.zanebenefits.com/blog/15-best-health-reform-blogs

Republican Tennessee Rep. Diane Black says that the Obama administration’s most recent Obamacare rule change will result in insurance companies keeping more profits while paying less for customers’ health care needs ---
http://dailycaller.com/2014/03/18/congresswoman-obama-admin-rule-change-lets-insurance-companies-keep-more-profits-while-paying-less-for-customers-care/

A long-delayed correction of a lie
"You Might Lose Your Doctor Under Obamacare," WebMd, March 14, 2014 ---
http://hotair.com/archives/2014/03/14/great-news-80-of-employers-have-or-may-raise-deductibles-thanks-to-obamacare/

Voters in November might be ready to show Democrats what they think about removing choice and hiking costs, as well as their arrogance in determining that a few politicians in Washington know better about their choices than they do. Unfortunately, Barack Obama doesn’t appear to have figured out this problem. In an interview with WebMD, Obama finally acknowledged that, contra his promise, people might not be able to keep the doctors they liked, but that they probably shouldn’t have liked those doctors in the first place.

Jensen Comment
Why won't he still admit the truth. Many of those doctors that "they liked" tend to be so good that they get more than enough business without working for medical clinics.  Many of the hospitals that refuse to participate are the best hospitals in the USA like the Andersen Cancer Center in Houston.

Here in New Hampshire 10 of the 26 hospitals and many of the best physicians in the state refuse to go on network. One of the main reasons is that patients in default on their health exchange premiums must be treated for 90 days with physicians and hospitals bearing the treatment costs for the last 60 of those 90 days. God forbid that the fat-cat insurance companies or the Federal government take the risks of paying for the free care during those 60-days.

How Physicians and Hospitals Can Try to Collect Bad Debts During Two Months When Medical Care is Mandated snf Insurance Companies Refuse to Pay for Deadbeat  Patient Care

The American Medical Association is protesting an Obamacare provision it argues will leave doctors with the bill for up to two months of unpaid care (out of the so-called 90-day "grace period" of unpaid premiums)
 

One of the Main Reasons Your Doctor and/or Hospital May be Refusing to Participate in the ACA:  Being Forced to Serve Deadbeats at No Pay
In New Hampshire, many of the doctors and 10 or 26 hospitals are refusing to be part of any ACA network of Medical service providers

"American Medical Association: Obamacare sticks doctors with unpaid bills,"  Daily Caller, March 19, 2014 ---
http://dailycaller.com/2014/03/19/american-medical-association-obamacare-sticks-doctors-with-unpaid-bills/

The American Medical Association is protesting an Obamacare provision it argues will leave doctors with the bill for up to two months of unpaid care.

The provision requires insurers to allow patients with federally-subsidized health insurance plans a 90-day grace period to pay their premiums before canceling the coverage. Insurers are on the hook for the first 30 days of care, if the customer never pays up, but doctors will be stuck without payment for any services between 30 and 90 days, until the coverage is canceled.

The American Medical Association was a strong supporter of Obamacare.

“If a patient is being treated for a serious illness, that requires ongoing care,” Dr. Ardis Dee Hoven, president of the AMA, said in a press release Wednesday. “The physician is having to assume the financial risk for this. That’s the bottom line.”

The AMA released new resources Wednesday for its member physicians, offering “step-by-step help for minimizing risk,” while admitting that the Obamacare rule “could pose a significant financial risk for medical practices.”

The doctors’ association spent $22 million lobbying for Obamacare to pass in 2010, the most of any health care organization, and has kept up their spending in the years since while the law’s final regulations have been tinkered with.

The rule’s damaging effect on doctors — especially those with private practices — exemplifies the split between the AMA’s lobbying ambitions and the outlook of the average doctors that do the work.

After Obamacare’s passage, just 13 percent of American physicians agreed with the AMA’s support of the law, according to a survey from physician recruitment firm Jackson & Coker. Surveys have repeatedly found that doctors don’t believe the law will let them help patients and make a living.

Read more: http://dailycaller.com/2014/03/19/american-medical-association-obamacare-sticks-doctors-with-unpaid-bills/#ixzz2wXTlkQDp
 

The new AMA resources for physicians include ---
http://www.ama-assn.org/ama/pub/news/news/2014/2014-03-19-ama-issues-grace-period-guide-to-assist-physicians.page

• Step-by-step guide to the ACA grace period
• Grace period collections policy checklist
• Model financial agreement language for patients receiving Advance Premium Tax Credits
• Sample letter: Grace period notice to patients

Jensen Comment
What I wonder is what happens to the deadbeat who plays the following game:  Pay the premium once every four months, then get one month of free coverage from the insurance company and two months of free coverage from all health care providers on the network.

However, if you have no assets to make lawsuits worthwhile just get free medical care in emergency rooms just like in years before the ACA.  That way you avoid having to pay a premium once every four months.

Still unanswered: exactly how many have paid premiums and how many were uninsured before signing up? If a large percentage of the new enrollees in Affordable Care Act plans had previously enjoyed coverage under plans cancelled by the Affordable Care Act, it will be hard for the White House to claim success, to say the least.
"New Health Exchanges Reach 5 Million Enrollees Republican Lawmakers Ask How Many Lacked Insurance Before Law," by By Jennifer Corbett Dooren, The Wall Street Journal, March 17, 2014 ---
http://online.wsj.com/news/articles/SB10001424052702303287804579445791842772638

Irony Alert: Union Report Charges ObamaCare with Worsening Inequality---
http://cdn.ralstonreports.com/sites/default/files/ObamaCaretoAFL_FINAL.pdf

The promise of Obamacare was the right one and the hope for extending healthcare coverage to the un-and under-insured a step in the right direction. Yet the unintended consequences will hit the average, hard-working American where it hurts: in the wallet. Currently a national dialogue is emerging by all political parties on the issue of income inequality. That is a debate worth having. The White House and Congressional Democrats are “resetting” the domestic agenda following the negative fallout from the rollout of the ACA. They plan to shift focus from health care to bread and butter issues of income inequality that have eroded the American paycheck for decad

Ironically, the Administration’s own signature healthcare victory poses one of the most immediate challenges to redressing inequality. Yes, the Affordable Care Act will help many more Americans gain some health insurance coverage, a significant step forward for equality. At the same time, without smart fixes, the ACA threatens the middle class with higher premiums, loss of hours, and a shift to part-time work and less comprehensive coverage.

• Transferring A Trillion Dollars in Wealth: Most of the ACA’s $965 billion in subsidies will go directly to commercial insurance companies, one of the largest transfers of public wealth to private hands ever. Since the ACA passed, the average stock price of the big for-profit health insurers doubled, their top executives were paid more than a half billion dollars in cash and stock options, and in the past 2 years, the top 10 insurers have spent $25 billion on mergers and acquisitions.

• Strangling Fair Competition: Before reform, different types of health plans were regulated under different bodies of law. The Obama Administration has blocked many non-profit health funds from competing for the law’s proposed trillion dollars in subsidies by refusing to set fair regulations for different types of plans. The unbalanced playing field will give employers of people covered by these plans powerful incentives to drop coverage.

• Moving to Part Time Work: The Administration’s experts say employers won’t follow the incentives and drop coverage. But they also told the nation that employers would not cut workers’ hours to get below the 30-hour per week threshold for “full time” work, even as 388 employers announced hours cuts since early 2012.

• Cutting People’s Pay: If employers follow the incentives in the law, they will push families onto the exchanges to buy coverage. This will force low-wage service industry employees to spend $2.00, $3.00 or even $5.00 an hour of their pay to buy similar coverage

Making Inequality Worse A Trillion Dollar Wealth Transfer The Congressional Budget Office projects that the federal government will spend at least $965 billion in subsidies to make coverage purchased through the new online marketplaces affordable.

Nearly all of that money will go directly to health insurance companies, one of the largest transfers of wealth from public to private hands in history. This is the heart of the ACA — subsidies to persuade health insurers to make their products affordable to new customers. Even before subsidy checks, the ACA is benefiting for-profit health insurers. The average share prices of the top 5 for- profits — Wellpoint, United, Aetna, Cigna, Humana — have more than doubled since the March 23, 2010 passage of the ACA. At a time of record stock prices, the Big 5’s aggregate share prices have increased almost twice as fast as the Standard and Poor’s 500 index of blue chip stocks. 2 For-Profit Health Insurance Stocks Since Obamacare $965 Billion: Projected insurance subsidies under Obamacare, 10 years $25

Continued in article

Jensen Comment
The report fails to mention that insurance companies will be bearing very little of the bad debts of insured people receiving medical care. These losses are mostly going to be passed on to the physicians, hospitals, and other providers of health care. The bad debts that are covered by insurance companies will be passed on to the public by way of higher premiums.

President Obama prefers that private insurance companies to be third parties in the ACA Act. Like the Clintons he prefers that the ACA be funded and managed by the Federal Government much like Medicare is managed by the Government.  However, in his zeal to get the ACA passed he agreed to an ACA monster that brings the private insurers into the ACA --- a disaster in the making where private insurance companies walk off with guaranteed profits.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Jensen Comment
Many people who are eligible legally or illegally for these new ACA tax credits don't know about them yet and probably won't understand them after they read this section of the ACA code. Chances are that your current tax adviser, like me, does not have clue about these credits that soon will be the law of the land.

"Are ObamaCare's Tax Credits Harmless? The Little Understood Dark Side Of The Subsidies," by Josh Archambault, Forbes, March 17, 2014 ---
http://www.forbes.com/sites/theapothecary/2014/03/17/are-obamacares-tax-credits-harmless-the-little-understood-dark-side-of-the-subsidies/

T-minus 14 days until open enrollment closes for ObamaCare. It is crunch time for thousands as they decide if they want to enroll, and ultimately how much of a tax credit to accept in order to determine their first premium payment amount. Much attention has been lavished on the “positives” of the ACA’s tax credits (also called premium subsidies). White House press releases often highlight the impact of the credits while chiding others for not including them when discussing the new higher premiums under the law. Yet, the new reality of ObamaCare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?

By accepting a tax credit, low-income or lower-middle class families face significant tax ramifications and potential financial risk. Congress has changed the rules twice on consumers for the credits, making the income cliffs steeper, and fully equipping the IRS to claw back overpaid subsidies (unlike the individual mandate penalty).

The flip side of the tax credits is almost unknown to the general public.

Who Exactly Gets The Tax Credits?

The ACA’s tax credits are given directly to the insurance companies, and are calculated on a sliding scale, based on family size, and in theory, to those making between 138% and 400% of the federal poverty level (FPL) in states that have expanded Medicaid eligibility. In states that have not expanded Medicaid, the tax credits are available to those making between 100% and 138% FPL.

However, individuals can claim them by estimating that they will make over 100% FPL even if they end up making 90% FPL in these states, effectively closing the coverage gap we have heard Medicaid expansion supporters and the media complain so loudly about. However, the tax credits are unavailable to those with an “affordable” offer of employer-based insurance, or for those on other forms of government-approved coverage like standard Old Medicaid or Medicare.

Yet, soon to be published research by my colleague Jonathan Ingram will show that the tax credits phase out quickly for those in the exchange, and are therefore unavailable for many young people (18-34) in numerous states making far less than 400% FPL, based on the complex formula used to calculate the subsidies, and the price of the plans available on the exchange. This fact is only making the Administration’s job of convincing young people to sign up even harder.

The credits can only be used in a government-sanctioned ObamaCare exchange. In other words, individuals purchasing private insurance on their own must decide if they want to keep their current insurance plan without a subsidy or drop their coverage to take the tax credit. Since so many states rejected the President’s call to renew policies for those facing cancellations, and the recent extension of that policy, millions of Americans are facing this exact decision of joining an exchange or buying elsewhere by March 31st.

All citizens that take the credit must file a tax return to receive the credits regardless of their income. Failure to do so will result in them being prohibited from seeking a credit in the future. Married couples must file a joint return.

How You Take The Credit Could Determine Exposure

The initial tax credit calculation will be based on an applicant’s income tax return from the previous year, or a best estimate of what it will be next year. The credit can be taken in advance at the beginning of the year. However, individuals who enroll in the ObamaCare exchange will run the risk of having to pay back a significant portion of the tax credit if their life circumstances change (more on this below).

The credit can also be taken on the following year’s return in the form of a refund. However, individuals who make this decision will be responsible for coming up with the full cost of the ObamaCare exchange insurance at the beginning of the year. Individuals and families do have the option of taking a partial credit.

Congress Has Changed ObamaCare’s Tax Credit Rules Twice

Republicans have by and large ignored the tax credit issue unless talking about the budget implications. Perhaps the silence is due to the fact that Congress has voted to change ObamaCare twice to increase the financial risk that families could face when they take the credit.

Since the enactment of ACA, these limits have been amended twice: first under the Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309), and then under the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayment Act of 2011 (P.L. 112-9). Congress changed the payback protection to vanish at the 400% poverty level and increased the payback amounts at 200% and 300% FPL from what they had been before.

The result will be surprise bills from the IRS in the mail come tax time 2015, in the order of a couple hundred dollars all the way up to full value of any subsidy received if a family crosses the 400% FPL threshold. (This could be $10,000-$12,000 for a family of four, as an example.) Just a few dollars of extra income could result in thousands of back taxes to be paid.

Life Change Should Be Reported To The Exchange, Requiring A New Application

Our lives are constantly in flux. Lower and middle-class families rarely find themselves in static work and life environments, but that is exactly what ObamaCare assumes. Even the most common and mundane life changes could significantly impact an individual’s financial situation if he or she decides to take the tax credit. So ObamaCare recommends that individuals report these changes immediately.

Continued in article

Jensen Comment
This suggests to me a possible tax student assignment that might help the IRS. Assign students in a tax course (probably teams of students) the creative task of thinking up how identity thieves filing false tax returns for the refunds can add to those refunds by filing for ACA tax credits. Of course the ID thieves don't have to worry about subsequent penalties since the IRS does not have a clue about who the thieves are that are filing false income tax returns for the refunds.

Better yet expand this to assigning students to write scenarios on all (or at least many)  ways that ID thieves can pad their fake tax returns in general to maximize illegal tax refunds.

The Hidden Rot in the Jobs Numbers
Hours worked are declining, resulting in the equivalent of a net loss of 100,000 jobs since September ---
http://online.wsj.com/news/articles/SB10001424052702304250204579433442474053878?mod=djemBestOfTheWeb_h&mg=reno64-wsj
This is partly due to seeking to avoid having to pay for medical insurance for employees. Employers having slightly more than 50 full-time workers are cutting back on hours allowed s0 as not have to provide medical insurance for any of their employees  --- that 50-worker bring line in the ACA.

Obama gave Oregon $304 million to build its defective Obamacare website that enrolled zero people (as of February 28, 2014) ---
http://danfromsquirrelhill.wordpress.com/2014/03/16/obama-gave-oregon-304-million-to-build-its-defective-obamacare-website-that-enrolled-zero-people/

Jensen Comment
Meanwhile Massachusetts fired the contractor that has been unable to deliver an Obamacare Website in that bluest of the blue states.

Feverish Pitch to Sell Over-Priced, High Deductible Insurance Plans to Young People
"Administration Plays to Young in Health Push," by Michael D. Shear and Tanzina Vega, The New York Times, March 19, 2014 ---
http://www.nytimes.com/2014/03/20/us/politics/racing-to-deadline-white-house-plays-to-young-in-health-care-push.html?hpw&rref=us 

. . .

Persuading millions of young people — especially African-Americans and Latinos — to buy insurance using HealthCare.gov is consuming every spare moment at the White House as President Obama and his aides race against a March 31 deadline, when enrollment ends for the year. They are waging their final public relations push with a zeal that underscores how critical success is for Mr. Obama’s political legacy, and how far behind they remain.

Officials have scaled back their original estimate of signing up seven million people, to six million. But according to enrollment figures released Monday, more than one million sign-ups will be needed to reach the reduced goal by the end of March. And there is concern that the administration still needs a larger proportion of 18- to 34-year-olds, the young and presumably healthy people whom insurance companies need as customers in order to keep premiums reasonable for everyone.

In an effort to reach young men, the White House is trying to turn March Madness into a frenzy about health care coverage as well as basketball. Mr. Obama’s N.C.A.A. tournament bracket, released on Wednesday, was accompanied by a “16 Sweetest Reasons to Get Covered” bracket. LeBron James, the Miami Heat star forward, is starring in 30-second ads promoting HealthCare.gov that will air during the college basketball games.

On Thursday, Mr. Obama will urge daytime TV viewers to sign up for coverage in an appearance on “The Ellen DeGeneres Show” from the White House. In the past three weeks, Mr. Obama has met with YouTube personalities in the Roosevelt Room, hosting some of the younger generation’s online favorites: a science geek, a drunken chef and an Obama impersonator. He dialed into Rickey Smiley’s hip-hop radio show and sat down in the Diplomatic Reception Room for separate interviews with the comedian Zach Galifianakis and a health care expert from WebMD.

“We are going to leave no stone unturned,” said Valerie Jarrett, a senior adviser to the president and the leader of the White House public engagement office, which is coordinating the Affordable Care Act effort. “Our goal is to meet people where they are.”

Michelle Obama, the first lady, urged people to sign up in an appearance at a health center in a black neighborhood in Miami, and made the pitch on ABC’s “Good Morning America.” Vice President Joseph R. Biden Jr. plugged the health care site at Mary Mac’s Tea Room in Atlanta.From January until the end of March, the Centers for Medicare and Medicaid Services, which runs the HealthCare.gov site and administers the Affordable Care Act, will have spent $52 million on paid media, officials said. Conservative opponents of the law have concentrated their spending on ads focusing on Democratic candidates and sowing doubts about the viability of the law.

The final push comes at a time when the administration is juggling other priorities. On March 6, at the height of the crisis in Ukraine, Mr. Obama spoke on the phone with President Vladimir V. Putin of Russia for an hour before going across town to urge Latinos to enroll during a town-hall-style meeting at a museum broadcast on three Spanish-language television networks. He returned to the White House a couple of hours later to announce the first sanctions on Russia.

“We’ve organized our outreach in a way so we can take care of the non-A.C.A. business that needs to be taken care of while devoting a great deal of time and energy to this effort,” Ms. Jarrett said.

Outside of Washington, the president’s allies are staging a final surge to enroll as many people as possible.

The targets in the last few days of the campaign are young people and minorities, with a particular focus on Hispanic and black youths — two crucial groups that are more likely to be underinsured, officials said. On a conference call last week with almost 3,000 pastors, Mr. Obama declared it “crunchtime” and asked them to do whatever they could do to urge members of their churches to sign up.

At a small church in the Tampa, Fla., neighborhood of Sulphur Springs, the Rev. Timothy Wynn took up the challenge on Sunday. In front of about 50 parishioners, he delivered a sermon that combined his religious guidance with a pitch for insurance.

“I know you came here for the word of God, and I’m going to give you the word of God,” he said. But before delivering that word, the pastor asked his parishioners, most of whom are black, to take out their cellphones and text friends to remind them to come to the church and sign up. He also asked them to go to the church’s Facebook page and “like” an open-enrollment flier there.

“Can you do that for me?” he said. “God not only cares about our spiritual being, he cares about our physical being as well.”

At the back of the church, All Nations Outreach Center, two health care “navigators” were positioned at tables with stickers and information pamphlets about how to sign up. At the end of the service, about 10 people stopped to ask questions.

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"Part I: The Obamacare Challenge for Employers – Employers with 50 or More Full-time Employees," Knowledge@Wharton, March