Tidbits Quotations
To Accompany the March 14, 2015 edition of Tidbits
http://www.trinity.edu/rjensen/tidbits/2015/tidbits031415.htm  
Bob Jensen at Trinity University




Only those who will risk going too far can possibly find out how far one can go.
T.S. Eliot

Be brave enough to start a conversation that matters.
Margaret Wheatley,

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

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

Happiness is like a butterfly: the more you chase it, the more it will elude you, but if you turn your attention to other things, it will come and sit softly on your shoulder.
Henry David Thoreau

What’s the problem with human extinction? Tolstoy asked. After all, science tells us the sun will eventually cool and all life on Earth will die off anyway. Sure, billions of years in the future, probably. But there’s actually a bright side to near-term extinction, he said: It will mean the human race will be spared billions of years of shame, billions of years of further degradation in what he charmingly called the “pigsty” of sex.
Ron Rosenbaum in "The Other Tolstoy and the Book of Night 3k 239 50 Sofiya Tolstoy’s long-lost novella tells us more about love and sex than her husband ever could,"
http://www.slate.com/articles/arts/books/2015/02/sofiya_tolstoy_s_novella_whose_fault_a_response_to_the_kreutzer_sonata_reviewed.single.html 

Say What?
The Congressional Budget Office says ACA subsidies will, in part, cost less because fewer people than expected are signing up for medical insurance?
http://thehill.com/policy/healthcare/235053-cbo-cost-of-obamacare-subsidies-shrinks-again

2015 Index of Economic Freedom
http://www.heritage.org/index/ranking
 

NYT:  Everything But the Truth
George W. Bush and his wife Laura marched in the Selma bridge crossing, but The New York Times cropped them out of the photographs ---
http://www.ijreview.com/2015/03/266170-whats-missing-new-york-times-frontpage-selma-march-speaks-volumes/

President Obama has quietly promised Massachusetts Sen. Elizabeth Warren complete support if she runs for president---
Edward Klein, NY Post
http://nypost.com/2014/07/06/this-means-warren-obama-backs-challenger-to-hillary/
Hillary Clinton is the only thing standing between Warren and the USA Presidency. It's most likely now or never for Warren, because, if she delays for two terms of Hillary Clinton, Elizabeth Warren will be 75 years old. The oldest President of the USA in history is Ronald Reagan who was age 69. It's doubtful that any candidate over 70 can withstand the rigors of a Presidential campaign.

It sounds like Obama doesn't have any friends on the world stage
Colin Campbell, The New York Times
http://www.businessinsider.com/obama-and-world-leaders-2015-3

(Bill)Clinton is "probably the most famous liar of all time."
Andrew Prokop --- http://www.vox.com/2015/3/2/8134419/clinton-portrait-blue-dress

But among the rising stars of liars is his wife
Using Private Email, Hillary Clinton Thwarted Record Requests
Michael S.Schmidt and Amy Chozick, The New York Times

The more likely truth is that she and her husband wanted to control how much of her communications at State would eventually become public—in case, say, she ran for President some day. And sure enough Mrs. Clinton violated State Department policy at the time by not turning over the emails in that private account to the government for its archives. She gave some of them to State only after Congress had requested them as part of the Benghazi probe, and State had none in its possession.
http://www.wsj.com/articles/clinton-alt-delete-1426030561?tesla=y

Did an artist put Monica's dress in the National Portrait Gallery's Bill Clinton painting?
Andrew Prokop --- http://www.vox.com/2015/3/2/8134419/clinton-portrait-blue-dress

A great place to start (at reducing Federal loan fraud) is the accounting for federal lending programs which deliberately understates their risks. Readers may have noticed that every time federal student-loan subsidies expand, liberals like Senator Elizabeth Warren (D., Mass.) hail it as a taxpayer windfall. She gets away with this because administrative expenses and market risk aren’t included in the loan cost estimates.
http://www.wsj.com/articles/ending-federal-loan-fraud-1426030608?tesla=y

Huge Numbers of Europeans Will Die From Air Pollution in the Next 20 Years ---
Sabrina Toppa --- http://time.com/3729637/europe-air-pollution-deaths-eu-environment/?xid=newsletter-brief

New York Times Worried That Allowing Cubans to Have More Money Will Increase ‘Income Inequality.
Matt Welch --- http://reason.com/blog/2015/02/24/new-york-times-worried-that-allowing-cub
Resolved --- having everybody equally poor is better than having income differentials. Yeah right!

The state controls well over 90 percent of the economy, paying workers salaries of about $20 a month in return for free health care and education, and nearly free transportation and housing. At least a portion of every citizen's food needs are sold to them through ration books at heavily subsidized prices.
"Report: Castro says Cuban model doesn't work," by Paul Haven. Associated Press, Yahoo News, September 8, 2010 ---
http://news.yahoo.com/s/ap/20100908/ap_on_re_la_am_ca/cb_cuba_fidel_castro_5

Quoted at lenght at http://www.trinity.edu/rjensen/booknew.htm
Jensen Comment
I guess NYT researchers missed this report that Cubans who are all paid equally lose incentives to work.>

Norway Just Deported 824 Muslims ---
http://qpolitical.com/norway-just-deported-824-muslims-every-american-needs-to-see-what-happened-next/

Presidential Oral History --- http://millercenter.org/oralhistory

Women are genetically superior to men ... Males are inferior beings
Professor Melvin Konner at Emory University ---
http://thepunditpress.com/2015/03/09/professor-women-genetically-superior-to-men-men-are-inferior-beings/

We'd rather be obese on benefits than thin and working.
Janice and Amber Manzur
http://www.telegraph.co.uk/news/uknews/11347454/Mother-and-daughter-weigh-a-total-of-43-stone-and-get-34k-a-year-handouts-but-refuse-to-diet.html 

Moocher Hall of Fame --- https://danieljmitchell.wordpress.com/the-moocher-hall-of-fame/





Obama just gave a speech for the ages (in Selma) ---
http://www.businessinsider.com/obama-what-they-did-here-will-reverberate-through-the-ages-2015-3#ixzz3Tn6vg2Ll

America's racial history "still casts its long shadow upon us," the nation's first black president said Sunday as he stood in solidarity and remembrance with civil rights activists whose beatings by police a half-century ago galvanized people against racial oppression and hastened passage of historic voting rights for minorities.

On the 50th anniversary of the "Bloody Sunday" march that erupted in police violence on Selma's Edmund Pettus Bridge, President Barack Obama praised the figures of a civil rights era that he was too young to know. He called them "warriors of justice" who pushed America closer to a more perfect union.

"So much of our turbulent history — the stain of slavery and anguish of civil war, the yoke of segregation and tyranny of Jim Crow, the death of four little girls in Birmingham, and the dream of a Baptist preacher — met on this bridge," Obama told the crowd under a broiling sun. "It was not a clash of armies, but a clash of wills; a contest to determine the meaning of America."

Thousands packed the riverside town for commemorations of the march of March 7, 1965, in what became the first of three aiming to reach Montgomery, Alabama, to demand an end to discrimination against black voters and all such victims of segregation. Scenes of troopers beating marchers on the bridge shocked the nation, emboldening leaders in Washington to pass the Voting Rights Act five months later.

Obama spoke immediately after Rep. John Lewis, a leader of the Selma march who was brought down by police truncheons — his skull fractured — that day in 1965.

"There's still work left to be done,' Lewis said. "Get out there and push and pull until we redeem the soul of America."

Continued in article

Full Transcript --- http://www.vox.com/2015/3/7/8168085/president-obama-selma-50


 

Bias in the Media and Academe ---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#LiberalBias

Bill Nye the Science Guy --- http://en.wikipedia.org/wiki/Bill_Nye
From American Thinker --- http://www.americanthinker.com/blog/2015/03/bill_nyes_unscientific_approach_to_climate_change_in_jackson_wy.html

Nye's tweet apparently suggests that climate change is to blame for the supposed lack of snow on the slopes around Jackson Hole, Wyoming. Michelle Malkin and JunkScience.com have already debunked much of this tweet, the latter by showing that Nye's picture was not of Jackson Hole, but instead of Jackson – and the former by illustrating that there was anything but an absence of snow in Jackson Hole.

NYT:  Everything But the Truth
George W. Bush and his wife Laura marched in the Selma bridge crossing, but The New York Times cropped them out of the photographs ---
http://www.ijreview.com/2015/03/266170-whats-missing-new-york-times-frontpage-selma-march-speaks-volumes/

NYPD cops badly beaten by suspects during arrest ---
http://nypost.com/2015/03/09/nypd-cops-beaten-by-suspects-during-arrest-in-housing-stairwell/
Was this ever mentioned by Al Sharpton, Bill de Blasio, or the NYT? Did I miss something?

NBC News Whitewashes History on Iran Diplomacy ---
http://www.weeklystandard.com/blogs/nbc-news-whitewashes-history-iran-diplomacy_880789.html

Women are genetically superior to men ... Males are inferior beings
Professor Melvin Konner at Emory University ---
http://thepunditpress.com/2015/03/09/professor-women-genetically-superior-to-men-men-are-inferior-beings/

From the Daily Caller on March 9, 2015 --- http://dailycaller.com/2015/03/09/more-evidence-of-climate-data-tampering-by-noaa/

When Dr. Roy Spencer looked up summer temperature data for the U.S. Corn Belt, it showed no warming trend for over a century. But that was before temperatures were “adjusted” by National Oceanic and Atmospheric Administration climate scientists — now the same data shows a significant warming trend.

ACLU sides with Redskins, says trademark should be permitted
http://hosted.ap.org/dynamic/stories/U/US_REDSKINS_NAME?SITE=MYPSP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2015-03-09-20-26-45
Why are the major television stations and newspapers mum on this one?

"Professor Calls Republicans Stupid & Racist," by Ted Starnes, Townhall, April 11, 2013 ---
http://townhall.com/columnists/toddstarnes/2013/04/11/professor-calls-republicans-stupid--racist-n1564681

"The Liberal Skew in Higher Education," by Richard Posner, The Becker-Posner Blog, December 30, 2007 --- http://www.becker-posner-blog.com/

"The Difference Between Political Journalists and B-School Profs," by Justin Fox, Harvard Business Review Blog, March 9, 2010 ---
http://blogs.hbr.org/fox/2010/03/the-difference-between-politic.html?cm_mmc=npv-_-DAILY_ALERT-_-AWEBER-_-DATE

"New View of Faculty Liberalism:  Why are professors liberal?" by Scott Jaschik, Inside Higher Ed, January 18, 2010 ---
http://www.insidehighered.com/news/2010/01/18/liberal 

Bob Jensen's threads about the liberal bias of the media and the Academy are at ---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#LiberalBias


How much do you know about the Islamic State? Take the Yahoo News quiz ---
http://www.csmonitor.com/World/Middle-East/2014/0923/How-much-do-you-know-about-the-Islamic-State/prime-source

I only missed one question (about an IS leader's full name).


Here's why the US and Israel are increasingly at odds over Syria ---
https://now.mmedia.me/lb/en/commentary/564865-the-weakness-of-the-wait-and-see-approach#ixzz3Smw7c5mY
Iran has vowed the total destruction of Israel.

Jensen Comment
It's a little like putting the North Korean Army south of the Rio Grande.
N. Korea vows 'merciless' war against US ---
http://news.yahoo.com/korea-us-hold-navy-drill-despite-north-threats-021134962.html


 

"The Clinton Foundation and Haiti Contracts : After the earthquake in 2010, the Clintons’ outsize influence in the small nation increased," by Mary Anastasia O’Grady, The Wall Street Journal, March 8, 2015 ---
http://www.wsj.com/articles/mary-anastasia-ogrady-the-clinton-foundation-and-haiti-contracts-1425855083?tesla=y

. . .

The problem with the Clintons in Haiti is that everywhere you go, they are there with the appearance of a conflict of interest. Haiti is unlikely to triumph over its long struggle against corruption when the U.S. government grants a former U.S. president wide power, with little oversight, to dispense hundreds of millions in the midst of such destitution.



"Clinton, Inc. is What is Wrong With America," by Mark Cunningham, New York Post, March 8, 2015 ---
http://nypost.com/2015/03/08/clinton-inc-is-whats-wrong-with-america/

Here’s the bottom line of the latest HillaryWorld scandals: Clinton Inc. embodies what’s wrong with America.

It’s about getting stinking rich from the inside connections forged in a life of public service.

It’s about using your “charity” and your high government office as adjuncts of your political machine.

It’s about refusing to play by the rules even as you want to set the rules for everyone else.

Start with the latest shocker, the email lunacy. You don’t get to keep your government work a secret from the government.

Anyone with a regular job gets it: Your work product belongs to the folks who sign your paycheck. How can that not be even more obvious when the signature is Uncle Sam’s?

That the question never occurred to Hillary is just one more sign of her overinflated sense of entitlement — as is the fact that she set the whole thing up right when she was taking the job.

And that none of her staff at State ever raised a question tells you what a pack of flunkies she gathered ’round herself.

(I mean, she installed the private email server in her home. Who, other than exiled Nigerian princes looking for our help, does that?)

Nor was that the only rule-for-everyone-else that Hillary blew through at State.

The email revelation came atop the news that, despite previous denials, the Clinton Foundation took in countless millions from foreign sources while she ran the State Department.

No one’s even bothered to ask yet about the cash the foundation raised while she served in the Senate.

What, indeed, to make of the entire nonstop flow of corporate and foreign money over all the years since her better half left office, when she’s plainly been the single person in America most likely to someday become president?

The Clinton Foundation doubtless does much good work — but it also serves to shield from public view the transfer of endless cash from around the world to the Clintons’ control.

Fine, plenty of politicians, especially here in New York, use nonprofits to advance their careers. But “legal” nonprofit abuse remains one of the great ongoing scandals of New York government.

And the Clinton Foundation reeks of the same insider dealing — operating on a global scale.

The New York Times, to its credit, outlined more than a year ago how the Clintons have used the foundation to pay their operatives between campaigns — all without any need for those awkward Federal Election Commission filings.

The Times and others have also noted how the foundation blurs with Bill Clinton’s murky business work — the consulting jobs that have made Bill and Hillary rich despite leaving the White House “dead broke.”

Look, the Clintons were going to do fine no matter what after Bill left the White House: Book deals, speaking fees, a few beyond-reproach corporate-board memberships would be enough to cover their legal bills and leave them comfortably in the 1 percent.

They could’ve even set up a charity — Jimmy Carter did great work through Habitat for Humanity after his presidency.

Instead, they just had to set up something new and messy — something that would let them leverage their connections into a whole new machinery of power and influence.

And they couldn’t even be bothered to cut off some of the cash flow to avoid blatant conflicts of interest with her ongoing “public service.”

And we’re still not done with Hillary’s rule-shredding at State. She also selflessly ensured that her protégés didn’t leave their government service dead broke.

Secretary Hillary granted waivers so her top State councilors could work on the side as consultants.

Her closest aide, Huma Abedin, apparently pulled down $135,000 from Uncle Sam for her work at State while “earning” $355,000 as a consultant for outside interests.

Actually, half the 355 grand was paid to Mr. Abedin, a k a Anthony Wiener, a k a Carlos Danger, who was himself making big bucks as a consultant.

Now, maybe some of those payments were “investments” in case Tony recovered from his (first) pervert-Twitter scandal and became New York’s mayor. But “work” sent his way would also help out Huma, and so earn points with Hillary.

Huma, incidentally, was one of the select few also granted a clintonemail.com account. Which means the only official records of Hillary’s on-the-job correspondence with her closest aide are those emails that HillaryWorld now chooses to share.

It’s all just a big, stinking ball of taking care of yourselves while you do the people’s business.

The great irony here is last month’s news from the Washington Post: Hillary’s consultants are busy working out her themes for 2016. Apparently, a big one is going to be “pushing for economic fairness.”

Henhouse, meet fox.

Jensen Comment
Hillary will be the next USA President not because she deserves to be the next President. She will win because anything the GOP can produce this year is so awful that Hillary will win hands down. Elizabeth Warren could probably beat her in the Democratic Primary, but Senator Warren won't run --- possibly because, even with the recent endorsement by President Obama, she's already too old to withstand the stress of a Presidential campaign.


 

How to Reduce Federal Loan Fraud by Accounting for Risks

A great place to start (at reducing Federal loan fraud) is the accounting for federal lending programs which deliberately understates their risks. Readers may have noticed that every time federal student-loan subsidies expand, liberals like Senator Elizabeth Warren (D., Mass.) hail it as a taxpayer windfall. She gets away with this because administrative expenses and market risk aren’t included in the loan cost estimates.
http://www.wsj.com/articles/ending-federal-loan-fraud-1426030608?tesla=y

Measuring Student Debt and Its Performance PDF --- http://www.newyorkfed.org/research/staff_reports/sr668.pdf

In general student loans are subprime loans

Question
How do you repo a college education?

The nation’s student-loan balance climbed by $31 billion last quarter to $1.16 trillion. That makes it the largest source of debt after mortgages, which gained $39 billion to $8.2 trillion in the fourth quarter. Auto-loan debt increased by $21 billion to $955 billion.
"Student-Loan Delinquencies Rise in U.S.," by Jeanna Smialek, Bloomberg News, February 17, 2015 ---
http://www.bloomberg.com/news/articles/2015-02-17/student-loan-delinquencies-rise-in-u-s-as-education-debt-swells?cmpid=BBD021715&alcmpid=

(Bloomberg) -- Student-loan delinquencies increased at the end of 2014, a troubling sign that Americans are failing to keep up with payments as education debt climbs, according to the Federal Reserve Bank of New York.

Data from the New York Fed released Tuesday showed 11.3 percent of student loans were delinquent in the final three months of 2014, up from 11.1 percent in the prior quarter. The share of auto loans at least 90 days overdue also rose, climbing to 3.5 percent from 3.1 percent the prior period, even as fewer credit card and mortgage loan payments were late.

“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student-loan balances and delinquencies is concerning,” Donghoon Lee, research officer at the New York Fed, said in an e-mailed statement. “Student-loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”

The nation’s student-loan balance climbed by $31 billion last quarter to $1.16 trillion. That makes it the largest source of debt after mortgages, which gained $39 billion to $8.2 trillion in the fourth quarter. Auto-loan debt increased by $21 billion to $955 billion.

Education loan balances have skyrocketed over the past decade. In the first quarter of 2005, outstanding student debt stood at $363 billion -- about a third of the current level, based on a 2013 New York Fed report.

Delinquency rates for student loans probably understate the actual situation, according to today’s report. About half of the student loans are in deferment, in grace periods or in forbearance, temporarily removing them from the repayment cycle.

Education debt delinquency levels have come down since 2013, when the rate reached 11.8 percent, yet remain elevated from around 6 percent a decade ago, according to the New York Fed. Student loans are the type of debt most likely to be past-due, having surpassed credit-card delinquency rates in 2012.

Jensen Comment
When car and truck owners default a repo guy shows up in the dead of night and takes the vehicle to the bank. How do you repo a college education?



"Making It Easier to Skip Paying Child Support:  The Obama administration seems more focused on absent parents’ interests than on their children’s welfare," by Rober Doar, The Wall Street Journal, March 9, 2015 ---
http://www.wsj.com/articles/robert-doar-making-it-easier-to-skip-paying-child-support-1425943234?tesla=y

With little public attention, the Obama administration has been changing America’s child-support enforcement. The most recent Census Bureau report found that in 2011 fewer than 50% of single mothers had child-support orders—down from almost 60% in 2003. At least part of this decline reflects the administration’s shifting the focus from helping single parents with children toward helping absent parents who say they can’t afford payments. This is good news for delinquents, but bad news for children already coping with not having two parents at home.

Making absent parents (usually fathers) provide financial help for their children used to have bipartisan support and plenty of media attention. Begun in 1975 and strengthened by the 1996 welfare reform, child-support enforcement is one of the few antipoverty programs that stresses personal responsibility over government dependency. State child-support enforcement agencies—with federal funding—use wage garnishments and other techniques to hold absent parents responsible for contributing financially to the care of their children.

Reimbursing the government for welfare payments to poor single mothers used to be a primary goal. But increasingly the program has shifted from “cost recovery” to distributing the vast majority of collections to families. In 2013, 95% of the $28 billion collected was distributed to custodial parents to help pay for the daily needs of their children and to reduce their need for government assistance. For such families living below the poverty line who receive child support, the income from collections averages 45% of their family income. These numbers make child-support enforcement arguably the most cost-effective antipoverty program, collecting more than $5 for every $1 of administrative cost.

Despite its success, the program has always had critics. In the past especially, orders for monthly child support were often out of line with what some low-income parents could be reasonably expected to pay. Arrearage balances could grow so high that they condemned parents to a lifetime of debt.

Over the years, however, much progress has been made in addressing these problems. Child-support programs have found ways to reduce arrears and to “right size” payment amounts for noncustodial parents who were willing to accept responsibility but had no way of paying excessive arrears or payments. This evolution has not been fast enough for the Obama administration, which is why it has diluted the focus on personal responsibility by emphasizing “arrears forgiveness,” and “discretionary enforcement,” for absent parents.

This also may be why the administration has proposed a major update of federal regulations governing the program—without seeking congressional approval. The administration is expected to announce the final rule this summer, when states will need to comply or face possible sanctions from the Department of Health and Human Services.

Some of the proposed changes are positive. One provision would let state child-support programs use federal child-support funding to implement job-training programs for some of the unemployed parents from whom they are trying to collect. Washington used to tell states not to use child-support funding for jobs programs. The Obama administration has decided to change that.

Other changes are problematic and reflect the administration’s ambivalence about a program that once operated on the principle that paying child support should be like death and taxes—something that cannot be escaped. Federal regulations discouraged child-support programs from categorizing cases as “uncollectable.” The administration’s changes will make it easier to give up on such cases. Since states can earn additional federal funds if their collection rate increases, one way to collect more on a per-case basis is to close the hardest cases. Now states would have an incentive to do so.

Other new provisions would limit the agency’s ability to determine the income of delinquent parents. Some people will go to great lengths to hide, or avoid earning, income that could be used to pay child support. The ability to ask a court to consider what the absent parent could be making, or appears to be making based on his standard of living, gives the authorities a stronger hand with evaders.

Authorities used to have help in this effort under a provision of the Temporary Assistance for Needy Families program, which requires single applicants for cash welfare payments to participate in court and administrative proceedings to establish child-support orders. Since the late 1990s, however, the number of TANF recipients has declined dramatically as poor single mothers went to work and sought assistance from other government programs (food stamps, Medicaid, housing help). While some advocates have suggested imposing the child-support requirement on recipients of these other, non-TANF forms of assistance, the administration has shown no interest.

In the past, President Obama has emphasized parental responsibility and the important roles that fathers play in their children’s lives. As White House officials conduct their final review of the proposed new child-support regulations, they would be wise to make the final product match the president’s rhetoric.

Mr. Doar is the Morgridge Fellow in Poverty Studies at the American Enterprise Institute. He served as the New York state Child Support Enforcement director from 1995 to 2000.

 


Book Review
"Piketty Corrects the Inequality Crowd:  The economist’s book caused a sensation last year, but now he says the redistributionists drew the wrong conclusions." By Robert Rosenkranz, The Wall Street Journal, March 8, 2015 ---
http://www.wsj.com/articles/robert-rosenkranz-piketty-corrects-the-inequality-crowd-1425854415?tesla=y

Capital in the 21st Century,” a dense economic tome written by French economist Thomas Piketty, became a publishing sensation last spring when Harvard University Press released its English translation. The book quickly climbed to the top of best-seller lists, and more than 1.5 million copies are now in circulation in several languages.

The book’s central proposition, that inequality in capitalist societies will inevitably grow, can be summed up with a simple equation: r>g. That is, the return on capital (r) outpaces the growth rate of the economy (g) over time, leading inexorably to the dominance of inherited wealth. Progressives such as Princeton economist Paul Krugman seized on Mr. Piketty’s thesis to justify policies they have long wanted—namely, very high taxes on the wealthy.

Now in an extraordinary about-face, Mr. Piketty has backtracked, undermining the policy prescriptions many have based on his conclusions. In “About Capital in the 21st Century,” slated for May publication in the American Economic Review but already available online, Mr. Piketty writes that far too much has been read into his thesis.

Though his formula helps explain extreme and persistent wealth inequality before World War I, Mr. Piketty maintains, it doesn’t say much about the past 100 years. “I do not view r>g as the only or even the primary tool for considering changes in income and wealth in the 20th century,” he writes, “or for forecasting the path of inequality in the 21st century.”

Instead, Mr. Piketty argues in his new paper that political shocks, institutional changes and economic development played a major role in inequality in the past and will likely do so in the future.

When he narrows his focus to what he calls “labor income inequality”—the difference in compensation between front-line workers and CEOs—Mr. Piketty consigns his famous formula to irrelevance. “In addition, I certainly do not believe that r>g is a useful tool for the discussion of rising inequality of labor income: other mechanisms and policies are much more relevant here, e.g. supply and demand of skills and education.” He correctly distinguishes between income and wealth, and he takes a long historic perspective: “Wealth inequality is currently much less extreme than a century ago.”

All of this takes the wind out of enraptured progressives’ interpretation of Mr. Piketty’s book, which embraced the r>g formulation as relevant to debates playing out in Congress. Writing in the New York Review of Books last May, for example, Mr. Krugman lauded the book as a “magnificent, sweeping meditation on inequality.” He wrote that Mr. Piketty has proven that “we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to ‘patrimonial capitalism,’ in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.”

The r>g formulation always struck me as unconvincing. First, Mr. Piketty’s definition of r as including “profits, dividends, interest, rents, and other income from capital” conflates returns on real business activity (profits) with returns on financial assets (dividends and interest).

Second, it ignores the basic rule of economics that when supply of capital increases faster than demand, the yield on capital falls. For instance, since the great recession, the money supply has grown far more rapidly than the real economy, driving down interest rates. Returns on government bonds, the least risky asset, are now close to zero before inflation and negative 1% to 2% after inflation. In today’s low-return environment, with the headwinds of income and estate taxes, it becomes a Herculean task to build and transmit intergenerational wealth.

Many mainstream economists had reservations about Mr. Piketty’s views even before he began walking them back. Consider the working paper issued by the National Bureau of Economic Research in December. Daron Acemoglu and James A. Robinson, professors at the Massachusetts Institute of Technology and Harvard, respectively, find Mr. Piketty’s theory too simplistic. “We argue that general economic laws are unhelpful as a guide to understand the past or predict the future,” the paper’s abstract reads, “because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society.”

The Initiative on Global Markets at the University of Chicago asked economists in October whether they agreed or disagreed with the following statement: “The most powerful force pushing towards greater wealth inequality in the U.S. since the 1970s is the gap between the after-tax return on capital and the economic growth rate.” Of 36 economists who responded, only one agreed.

Other critics have questioned the trove of statistical data Mr. Piketty assembled to chart trends in income and wealth in the U.S., U.K., France and Sweden over the past century. Are such diverse data comparable, and have the adjustments that Mr. Piketty introduced to make them comparable distorted the final picture?

After an extensive review, Chris Giles, the economics editor of the Financial Times, concluded in May last year that “Two of Capital in the 21st Century’s central findings—that wealth inequality has begun to rise over the past 30 years and that the U.S. obviously has a more unequal distribution of wealth than Europe—no longer seem to hold.”

Mr. Piketty is willing to stand up and say that the material in his book does not support all the uses to which it has been put, that “Capital in the 21st Century” is primarily a work of history. That is certainly admirable. Now it is time for those who cry that we are heading into a new gilded age to follow his lead.

Mr. Rosenkranz is a financier and economist who promotes civil discourse as founder of the Intelligence Squared U.S. debates.

Earlier Book and Reviews

Thomas Piketty’s 696-page book Capital in the Twenty-First Century is No. 1 on the Amazon bestseller list. It’s a serious economics book that takes a long, hard look at the dynamics affecting the distribution of capital, the concentration of wealth, and the long-term ---
http://www.openculture.com/2014/04/pikettys-capital-in-a-nutshell.html

Reviews of this Piketty book ---
http://taxprof.typepad.com/taxprof_blog/2014/04/the-debate-over.html

Review of this Piketty book ---
http://taxprof.typepad.com/taxprof_blog/2014/04/the-debate-over.html

. . .

he bottom line: You can appreciate his economic history without buying into his forecast.  And even if you are convinced by his forecast, you don't have to buy into his normative conclusions.

 

Ten ways to fight inequality without Piketty's Wealth Tax --- http://qz.com/201695/ten-ways-to-fight-inequality-without-pikettys-wealth-tax/

But just as there is more than one way to skin a cat, there’s more than one way for society to push back against growing inequality. Commentators reacting to Piketty’s thesis have offered up a bevy of policy options they see as more feasible or with fewer unintended consequences.

1) Open the borders.
African migrants sit on top of a border fence covered in razor wire between Morocco and Spain's north African enclave of Melilla during their latest attempt to cross into Spanish territory, April 3, 2014. Spain has more than doubled the strength of security forces at Melilla, after about 500 people stormed its fences in the biggest border rush for years earlier this month. Immigrants from all over Africa regularly dare the razor-wire fences of Spanish enclaves Ceuta and Melilla, which are surrounded by Moroccan territory and sea. African migrants try to get into Spain. Reuters/Jesus Blasco de Avellaneda

By intent and necessity, Piketty’s book is focused on wealthy countries, but we know well that emerging markets are only becoming more important to the global economy. Economist Suresh Naidu notes that “if we’re aiming for politically hopeless ideas, open migration is as least as good as the global wealth tax in the short run, and perhaps complementary.” More migration would redress global inequality by giving more earning power to migrants from poor countries, while lowering capital’s share of income in wealthy countries. 1

2) Get rid of some intellectual property protections.
A police officer displays seized Parvon Spas capsules, a type of analgesic and anti-spasmodic, in Jammu July 28, 2009. Police said on Tuesday their men recovered 20,000 capsules from three drug peddlers during a routine search at a police check post on the outskirts of Jammu. “Contraband” drugs in India.REUTERS/Mukesh Gupta

One of the scary ideas in Piketty’s vision is the rise of a new class of rentiers who earn their money not by working but simply from the capital returns on their assets. One solution is to get rid of a major source of modern rents—patents on software and pharmaceuticals. The case against software patents has been made, even by software companies, as a way to stop wasteful patent trolling and unleash innovation. For medicines, that an Indian factory can make the same drugs far more cheaply than an American factory, with the only difference being patent protection, means there is already pressure on the current system. While drug companies say the research that leads to new cures wouldn’t be possible without restrictive patents, economists wonder if pure competition wouldn’t do the same job. 1

3) Cut taxes.
The mosaic on the the patio of the South Beach mansion formerly owned by fashion designer Gianni Versace in Miami Beach, Florida July 23, 2013. Versace spent $33 million renovating the house, which features a 54-foot mosaic pool lined with 24-karat gold, according to Fisher Auction Company. The mansion will be offered for sale at an auction on September 17, 2013. The wealth Americans are already taxing.Reuters/Gaston De Cardenas

This one is actually stolen from Piketty himself, who responds to skeptics of his wealth-tax idea by saying that the US already has a wealth tax. It varies from locality to locality, but the average American real-estate owner pays an average property tax of 1.38% of a home’s value. Piketty thinks that merely turning this into a tax on “net” and not nominal capital would help reduce inequality: +

[The United States] has a property tax which is a pretty big wealth tax. I would prefer it to be a progressive tax that was proportional and I would prefer it to be on net wealth rather than the gross value of real estate—if you take someone whose house is $500,000 and they have a mortgage liability of $490,000, his net wealth is $10,000, I would propose he would pay no property tax, no wealth tax. Right now he is paying as much property tax as someone with no mortgage who inherited his apartment 20 years ago. My premise is not to tax to destroy the wealth of the wealthy, it’s to increase the wealth of the bottom and the middle class. +

Of course, the missing tax revenue would have to be made up for somehow—higher taxes, less public spending, more public borrowing—elsewhere. 

4) Crack down on offshore tax havens.
The island of Grand Cayman, a British dependency that covers 76 square miles (197 square kilometers) in the northwest Caribbean Sea, is visible in this near-vertical photograph. Geologically similar to The Bahamas, Grand Cayman is a low-lying, limestone island located on top of a submarine ridge. The city of George Town, the capital and chief port of the Cayman Islands, can be seen at the southwest end of the island. Grand Cayman’s 7-mile beach can be seen on the western side of the island. All 76 square miles of Grand Cayman, one of the largest sources of foreign investment in the US.NASA

Many objections to Piketty’s wealth tax include a reference to how hard it would be to tax wealth, because wealth is so very good at hiding in shell companies and secretive offshore trusts. But that’s a problem already: Perhaps $34 to $109 billion in US-owned financial assets are hidden from the tax man in Caribbean tax havens, just to avoid income on capital gains, a recent study found. The good news from that same study is that a push for tax information exchanges is cutting down on assets hidden overseas. But there’s lots more to be done on that front, whether it’s demanding public registration of the true owners of shell companies, or getting more countries to sign tax information exchange agreements. +

5) Open up the city.
Oracle Team USA sails near the city skyline against Emirates Team New Zealand during Race 14 of the 34th America's Cup yacht sailing race in San Francisco, California September 22, 2013. Nothing says inequality like a rich man’s yacht in front of a city where no one can afford to live.Reuters/Robert Galbraith

One wealthy countries manifest inequality is the high cost of living in large cities. This cost is partly a result of high demand to live there, but is also the more artificial product of zoning decisions, building codes and nostalgia that prevent the optimal utilization of space. Changing building codes to allow more development of affordable housing, taller buildings and fewer subsidies for cars would help alleviate inequality.

6) Wait for China’s labor costs to catch up.
An employee yawns as he works at a garment factory in Humen township, Guangdong province November 24, 2013. Activity in China's vast factory sector grew at a milder pace in November as new export orders shrank, a preliminary survey showed on Thursday, bolstering expectations the economy could lose some of its vigour in the fourth quarter as Beijing shifts its focus to structural reform. Picture taken November 24, 2013. Workers of the world, unite.Reuters/Stringer

One big reason wages have stagnated in the American middle class—thus widening the gap between them and the rich—is competition with cheaper labor in China and other countries. It has pushed many manufacturing jobs offshore, or forced US factories to automate faster than they might have otherwise. But wages won’t be low in China forever: Labor costs are already rising there, as low-wage jobs move to other places. It’s not inevitable, but some economists think that the trend could continue, as so-called “catch-up” growth spreads across the world—Africa, perhaps, is next. This growth lifts living standards and makes workers demand raises. On a globe without an obvious source of cheap labor, wages have to rise. Smarter trade rules might help accelerate this process.

7) Unleash antitrust.
Carlos Brito, Chief Executive of Anheuser-Busch InBev, poses during a news conference on the company's 2012 results in Leuven February 27, 2013. Anheuser-Busch InBev, the world's biggest beer maker, forecast a weak start to the year in the United States and Brazil after slightly lower earnings than expected in the final months of 2012. Carlos Brito’s InBev empire—which controls 25% of the world’s beer production—is often dinged for monopolistic practices.Reuters/Francois Lenoir

Fewer monopolies, lower prices, less inequality—it’s all so simple, right? Economist Dean Baker specifically cites the telecom industry and its push toward consolidation, but there are good arguments that sectors from beer to tech to agriculture have consolidated in ways, sometimes subtle, that hamper economic growth and competition. Anti-trust rules, aggressively enforced, could improve life for customers, and by forcing companies to compete rather than just sit on their monopolistic laurels, would also lower profit margins for shareholders—tough luck, but good for equality. +

8) Punish the financial sector.
JPMorgan Chase Chairman and CEO Jamie Dimon speaks during a discussion on "Closing the Workforce Skills Gap", at the Aspen Institute in Washington December 12, 2013. Don’t even try it.Reuters/Mike Theiler

A favorite among populists of all stripes. Pruning the banks isn’t easy, as the mixed experience of reformers after the worst financial crisis in most of our lifetimes showed. But the financial sector’s growing share of income in wealthy economies still has people on the left and right supporting policy ideas—from financial transaction taxes, to higher capital requirements, to limits on bank sizes—that would make the sector less profitable. That means less money going to annual trading bonuses, and presumably more money invested in the real economy.

9) Create more sovereign-wealth funds.
Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area where Tidelands Oil Production Company, which is owned by Occidental Petroleum Corporation (Oxy), operates near Long Beach, California July 30, 2013. Occidental Petroleum posted a smaller-than-expected quarterly profit on Tuesday, hurt by lower oil prices in the Middle East and North Africa, where the fourth-largest U.S. oil company is considering an exit. Out of the ground and into the national investment account.Reuters/David McNew

The key reason inequality tends to increase, Piketty says, is that investment returns (which go to the rich) will always exceed economic growth. But what if we give the public a share of those investment returns? One proposal from economist Tyler Cowen is the creation of government-run investment funds. These are already a common tool in countries with massive natural-resource wealth; they serve to diversify the national income stream and make it more sustainable. The US—which is no slouch on the natural resources front itself—could conceivably create a sovereign-wealth fund and share the dividends.

10) Massive social upheaval and bloody conflict.
In this April 20, 1936 file photo, armed troops march past German Chancellor Adolf Hitler during a parade in Berlin to celebrate his birthday. As the Nazis increasingly targeted Jews and others they considered enemies, they moved in 1938 to loosen gun statutes for the loyal majority, said Bernard Harcourt, a University of Chicago professor of law and political science who has studied gun regulations under Hitler. The 1938 law is best known for barring Jews from owning weapons, after which the Nazis confiscated guns from Jewish homes. But Harcourt points out that Hitler's gun law otherwise completely deregulated acquisition of rifles, long guns and ammunition. It exempted many groups from requiring permits. The law lowered the age for legal gun ownership from 20 to 18. And it extended the validity of gun permits from one year to three years. Bad news.AP Photo

Not exactly ideal, but one of the most convincing empirical findings from Piketty’s research is that World War I, the Russian revolution and World War II were the great levelers of the 20th century, wiping out more than a century of capital accumulation and creating the conditions for more equitable growth in their wake. Continent-wide warfare may not be a pleasant prospect, but it’s probably a good deal easier to bring about than most of the solutions listed above. Why, there’s a handy little annexation going on in central Europe right about now.

Jensen Comment
Not mentioned is seriously curtailing the underground economy that wealthy employers as well as struggling employers use to reduce wages and encourage tax avoidance of workers. USA Today estimated this to be a $2 trillion underground economy in the USA.

 


"Iran on the Nuclear Edge:  Official leaks suggest the U.S. is making ever more concessions," The Wall Street Journal, February 27, 2015 ---
http://www.wsj.com/articles/iran-on-the-nuclear-edge-1425080647?tesla=y

Secretary of State John Kerry told Congress this week that no one should pre-judge a nuclear deal with Iran because only the negotiators know what’s in it. But the truth is that the framework of an accord has been emerging thanks to Administration leaks to friendly journalists. The leaks suggest the U.S. has already given away so much that any deal on current terms will put Iran on the cusp of nuclear-power status.

The latest startling detail is Monday’s leak that the U.S. has conceded to Iran’s demand that an agreement would last as little as a decade, perhaps with an additional five-year phase-out. After that Iran would be allowed to build its uranium enrichment capabilities to whatever size it wants. In theory it would be forbidden from building nuclear weapons, but by then all sanctions would have long ago been lifted and Iran would have the capability to enrich on an industrial scale.

On Wednesday Mr. Kerry denied that a deal would include the 10-year sunset, though he offered no details. We would have more sympathy for his desire for secrecy if the Administration were not simultaneously leaking to its media Boswells while insisting that Congress should have no say over whatever agreement emerges.

The sunset clause fits the larger story of how far the U.S. and its allies have come to satisfy Iran’s demands. The Administration originally insisted that Iran should not be able to enrich uranium at all. Later it mooted a symbolic enrichment capacity of perhaps 500 centrifuges. Last July people close to the White House began talking about 3,000. By October the Los Angeles Times reported that Mr. Kerry had raised the ceiling to 4,000.

Now it’s 6,000, and the Administration line is that the number doesn’t matter; only advanced centrifuges count. While quality does matter, quantity can have a quality all its own. The point is that Iran will be allowed to retain what amounts to a nuclear-weapons industrial capacity rather than dismantle all of it as the U.S. first demanded.

Mr. Kerry also says that any deal will have intrusive inspections, yet he has a habit of ignoring Iran’s noncompliance with agreements it has already signed. Last November he insisted that “Iran has lived up” to its commitments under the 2013 interim nuclear agreement.

Yet even then Iran was testing advanced centrifuge models in violation of the agreement, according to a report from the nonpartisan Institute for Science and International Security. In December the U.N. Security Council noted that Iran continued to purchase illicit materials for its reactor in Arak, a heavy-water facility that gives Tehran a path to a plutonium-based bomb.

The International Atomic Energy Agency reported last week that Iran was continuing to stonewall the U.N. nuclear watchdog about the “possible military dimensions” of its nuclear program. On Tuesday an exiled Iranian opposition group that first disclosed the existence of Tehran’s illicit nuclear sites in 2002 claimed it had uncovered another illicit enrichment site near Tehran called “Lavizan-3.” The charge isn’t proven, but Iran’s record of building secret nuclear facilities is a matter of public record.

As for the idea that the IAEA or Western intelligence agencies could properly monitor Iran’s compliance, a report last year from the Pentagon’s Defense Science Board is doubtful. “At low levels associated with small or nascent [nuclear] programs, key observables are easily masked,” the board noted.

This is significant since the Administration insists that any deal will give the U.S. at least one year to detect and stop an Iranian “breakout” effort to build a bomb. Iran’s ballistic missile programs aren’t even part of the negotiations, though there is no reason to build such missiles other than to deliver a bomb.

The Administration’s emerging justification for these concessions, also coming in leaks, is that a nuclear accord will become the basis for a broader rapprochement with Iran that will stabilize the Middle East. As President Obama said in December, Iran can be “a very successful regional power.”

That is some gamble on a regime that continues to sponsor terrorist groups around the world, prop up the Assad regime in Syria, use proxies to overthrow the Yemen government, jail U.S. reporter Jason Rezaian on trumped-up espionage charges, and this week blew up a mock U.S. aircraft carrier in naval exercises near the Strait of Hormuz. ***

Given how bad this deal is shaping up to be, it’s not surprising that U.S. allies are speaking out against it. “We prefer a collapse of the diplomatic process to a bad deal,” one Arab official told the Journal last week. Saudi Arabia has also made clear that it might acquire nuclear capabilities in response—precisely the kind of proliferation Mr. Obama has vowed to prevent.

No wonder many in Congress want to hear Israeli Prime Minister Benjamin Netanyahu next week. They look at all of this public evidence and understandably fear that the U.S. is walking into a new era of nuclear proliferation with eyes wide shut.

 


Young people earn less today than they did in 1989
"Bad News For The Class Of 2008," by Andrew Flowers, Nate Silver's 5:38 Blog, March 2, 2015 ---
http://fivethirtyeight.com/features/bad-news-for-the-class-of-2008/

. . .

But what’s worse, recession millennials like Joe, Richard and their friends are hard-pressed to make up the ground they lost, just because of their unlucky timing. Research from Yale University economist Lisa Kahn shows that when college graduates enter the labor market affects their lifetime earnings. Her 2009 article in Labour Economics studied the timing of college graduates in the early 1980s using the National Longitudinal Survey of Youth. Those who graduated in a bad economic year had lower earnings even 14 to 23 years later. Specifically, for each percentage-point increase in the unemployment rate when graduating from college, there was an average wage loss of 3 to 4 percent per year.

Kahn’s research on graduating in a recession indicates that Joe, Richard and other recent college graduates will feel the effects for decades.

Jensen Comment
Timing is all-important to almost everything in life. When I was on a battleship we played hide and seek games with Russian submarines. It was in those  "peaceful" Cold War years after the hot years in Korea and before the hot years in Viet Nam. Terrorism as we know it today had not been invented.

I got a free ride for five years in the Stanford University accounting doctoral program because the Ford Foundation poured money into colleges of business after the Gordon and Howell Report and the Pearson Report both concluded that business studies in major universities should be upgraded with more Ph.D. faculty and research in the Academy. My timing was perfect by sheer luck! I got funding for full tuition and living expenses and even savings for later years after graduation.,

And what good timing to choose accountancy for my doctoral studies as opposed to anything else I can think of, because those were the years of dire shortages of accounting Ph.D. faculty and soaring demand for accountancy as a career choice by university students. My timing was perfect by sheer luck!

I could go on in life about how so many good things in my life can be attributed to good timing on a serendipitous path.

Years later I even retired at a perfect time. In Year 2006 interest rates were still quite high and it was a perfect time convert all my TIAA-CREF accounts into lifetime annuities. Shortly thereafter came the economic crash followed by the Fed's decision to drive savings interest rates to almost zero. I didn't care personally because I was locked into those high pre-crash rates that may never return in the USA. My timing for retirement was perfect by sheer luck.

My life was and still is very good. I attribute almost all of this to very lucky timing. It was sheer luck! But I like to brag that it was all brains and personality. Yeah Right!

My Glimpse of Heaven ---
http://www.trinity.edu/rjensen/max01.htm



Clintons forced to return some of the White House furniture they stole in Year 2000
---
http://articles.latimes.com/2001/feb/10/news/mn-23723


Companies that used to pay the medical insurance for Workers Comp that covers employee injuries on the job are using the ACA to shift those insurance costs to taxpayers ---
 
"The Demolition of Workers’ Comp:  Over the past decade, states have slashed workers’ compensation benefits, denying injured workers help when they need it most and shifting the costs of workplace accidents to taxpayers," by Michael Grabell, ProPublica and NPR, March 4, 2015 ---
 http://www.propublica.org/article/the-demolition-of-workers-compensation

March 6, 2015 reply from Patricia Walters

The article talks about the shift of the cost of on the job injuries from companies to taxpayers happening over decades. Since the ACA is only a couple of years old, it cannot be the cause of this shift.

There was an NPR segment a couple of days ago about this issue. When an employee is not compensated for injuries that prevent them from working or working at their former jobs, they may end up on Medicaid and food stamps. When insurance company doctors determine, without even seeing a patient, that an injury is either not serious or did not occur on the job, rather than the patients physician, what can we expect. Employees are rarely in an economic position to take legal action.

The ACA has nothing to do with this issue.

Pat

March 6, 2015 reply from Bob Jensen

Hi Pat,

Good point.

My wife's experience illustrates your point. She was a surgical nurse. When a surgeon ordered her to lift a very heavy, instrument-laden table over a a power cord she herniated two discs and had to be put in traction in the hospital for over a month.

She received outstanding workers comp medical insurance that paid everything plus her disability salary for over five years. She had eight subsequent spine surgeries where her actual disability increased after each surgery while she was on the great workers comp insurance.

Then the workers comp insurance company threatened to eliminate her benefits if she did not go on Social Security Disability and Medicare when she was slightly over 50 years of age. Thus taxpayers gave her a lifetime of disability salary and Medicare.

Medicare eventually paid over a million dollars for seven additional complicated spine surgeries.

Medicare is great insurance but it only pays 80% of hospital billings and does not pay for all medications like workers comp insurance. And the supplemental Medicare plans are very costly. Hence, in my wife's case worker comp insurance was much better than Medicare.

But we were eventually intimidating by the worker comp insurance company to shift to Medicare.

We maybe could have fought in court, but that would have been very costly.

Bob

March 6, 2015 reply from Patricia Walters

Bob:

I knew from your posts that your wife had serious back problems. I didn't know that her back injury happened when she was a nurse. Nursing is one of the most dangerous professions. There have been any number of programs recently highlighted the risk to back injury from lifting patients. I shouldn't be surprised that a surgeon asked(told) her to lift is table.

Pat

March 6, 2015 reply from Bob Jensen

Hi Pat,

One thing that's happened with the USA legal lottery system is that employees get treated better than in the old days, especially by physicians in hospitals. Some physicians, certainly not all, used to treat staff of a hospital disrespectfully like their personal slaves. One thing that used to get to my wife in the early days was the way physicians would do such things as tell filthy jokes during surgeries and blame staff for their own mistakes.

For example, one of my wife's duties used to be to count sponges put inside the patient to soak up blood. One time she insisted to a surgeon that he left a sponge behind. He became furious with her and wrote her up for not being able to count. Months later the patient was returned to the operating room with a serious infection. Sure enough the cause of the infection was a sponge left behind. The surgeon, however, never once apologized to my wife.

These days with so many lawyers and regulations, physicians tend to treat the staff more respectfully. Skilled nurses, for example, are hard to come by. The hospitals treat them as precious help. Some hospitals even send out cleaning staff to clean apartments and homes of nurses who will take extra call duty.

More importantly, hospitals now listen when nurses and technicians complain.

Bob

 


"Milton Friedman's 1964 theory on booms and busts explains what's happening in Europe," by Grégory Claeys and Thomas Walsh, Bruegel,  Business Insider, February 25, 2015 ---
http://www.businessinsider.com/milton-friedmans-plucking-model-and-europe-2015-2

. . .

The plucking model theory vs. the natural rate theory

Milton Friedman’s 1964 “plucking model” is a simple story about how economies fluctuate, and the nature of recessions. It provides an alternative theory to the natural rate theory, which is by far the dominant view of how the economy works among macroeconomists today.

According to the natural rate theory, output fluctuates around an equilibrium trend. This equilibrium or natural level (the blue line on the left hand side of Figure 2 below) is consistent with an inflation rate that is neither collapsing nor exploding. An overheating economy producing more than its natural level (when the red line is above the blue line) will experience inflation, and conversely persistent spare capacity will start to push prices in the other direction (blue below red).

On the contrary, Friedman’s model assumes that output can only move along a ceiling value (the blue line on the right hand side of Figure 2 below), corresponding more or less to the full utilization of capital and labour, or be plucked downwards. Plucking shocks are temporary demand shocks, whereas fluctuations of the ceiling itself are determined by supply shocks (technologic, demographic, regulatory, etc.).

Read more: http://www.bruegel.org/nc/blog/detail/article/1579-the-plucking-model-of-recessions-and-recoveries/#ixzz3SmucUde


Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ---
http://www.zerohedge.com/news/2015-03-05/japan-now-spends-43-tax-revenue-fund-interest-debt


Pension Ponzi Fraud:  Chicago = Detroit = Stockton

"Rahm Emanuel's Chicago Nears Fiscal Free Fall," Investors Business Daily, March 2, 2015 ---
http://news.investors.com/ibd-editorials/030215-741568-emanuels-chicago-nears-fiscal-free-fall.htm

. . .

Chicago's finances are staggering under the weight of an unfunded pension liability that Moody's Investors Service has estimated at $32 billion, eight times the city's operating revenue.

Chicago has a $300 million structural deficit. And Illinois law requires the city to up its 2016 contributions to its police and fire pension funds by $550 million.

"This is an unfortunate wake-up call for anyone still asleep over the fiscal cliff facing the city of Chicago," said Laurence Msall, president of the Chicago-based government finance watchdog, the Civic Federation.

The steady financial decline of the nation's third-largest city prompted us recently to say that Chicago was well on its way to becoming the next Detroit.

In other words, it's another bankrupt monument to the perils of Democratic governance: a one-party town in one of the bluest states, whose mayor, former White House Chief of Staff Rahm Emanuel, learned financial discipline at the feet of President Barack Obama.

A large part of Chicago's problem is that the game of maintaining campaign armies by overpromising and underfunding pensions is over. Emanuel can expect little help from Illinois' new Republican governor, Bruce Rauner, who is trying to fix similar problems at the state level.

Chicago's pension funds are only 40% funded, and prospects aren't good, as people — particularly high-income individuals and businesses — flee the city's high taxes and stiff regulations.

Emanuel recently emerged from the Windy City's mayoral primary with just 45% of the vote against four opponents, forcing Chicago's first-ever mayoral runoff. A poll taken by local polling firm Ogden & Fry on Feb. 28 showed Emanuel leading second-place primary finisher Jesus "Chuy" Garcia, who serves on the Cook County Board of Commissioners, by a slim 42.9% to 38.5% margin. Chicago natives are clearly restless.

As Aaron Renn has noted in City Journal, Chicago lost 7.1% of its jobs in the first decade of this century. Its famous Loop, the second-largest business district in the nation, lost 18.6% of its private-sector positions.

Raising the city's minimum wage will not reverse that trend. People are leaving in droves, voting the only way they can in a one-party town — with their feet.

From 2000 to 2009, Chicago's population shrank by 200,000 — the only one of the nation's 15 largest cities to lose people. The city now has 145,000 fewer school-age children than it had more than a decade ago, according to district data, forcing the closure of about 100 schools since 2001.

Chicago may soon be forced to go to Washington for a bailout similar to New York City's 1975 rescue. The prospect of Emanuel begging his former boss, President Obama, for financial help would be ironic indeed.

The man who once said that a crisis is a terrible thing to waste now finds his city and President Obama's home town in fiscal crisis and his own political future teetering on the brink.

"Debt-Saddled Municipal Budgets Get a Lifeline:  A unanimous Supreme Court held that health benefits for retired workers can be renegotiated or reduced," by Robert C. Pozen And Ronald J. Gilson, The Wall Street Journal, March 1, 2015 ---
http://www.wsj.com/articles/robert-pozen-and-ronald-gilson-debt-saddled-municipal-budgets-get-a-lifeline-1425249172?tesla=y

While underfunded public-employee pensions capture the headlines, health-insurance benefits for retired state and local workers are also a huge problem. But a recent ruling by the Supreme Court may help state and local governments scale back these benefits.

Unlike public pension plans, retiree health benefits aren’t funded in advance; they are typically paid out of current tax revenues, so they compete with other budget priorities like schools and police. This competition will only grow more intense, as unfunded retiree health benefits are close to $1 trillion, according to a recent study in the Journal of Health Economics.

Several cities and states have tried to reduce the scope of retiree health-care services, or to increase the portion of the premiums paid by retired workers going forward. Public unions have frequently sued, claiming the benefits are vested for life—roughly parallel to the legal arguments the unions have made against efforts to curb future pension costs.

In late January, however, the Supreme Court issued an unanimous decision that will increase the chances of local governments winning such lawsuits. While the case involved a private business and its union, the principles should generally apply to public-sector agreements.

M&G Polymers vs. Tackett involved a collective-bargaining agreement that provided certain retirees, along with their surviving spouses and dependents, with a full company contribution toward the cost of their health-care benefits “for the duration of [the] Agreement.” The contract was subject to renegotiation after three years, but the critical legal question was whether the retirement health-care benefits continued even after the agreement expired—in effect whether the intent was to vest these benefits for life.

The union argued that the contract did vest these benefits for life and the Sixth Circuit Court of Appeals agreed. The Supreme Court reversed, noting that to prevail, the plaintiffs, in this case the union, had to supply concrete evidence—“affirmative evidentiary support”—that lifetime vesting of retiree health benefits was what both parties to the agreement intended.

Normally, the explicit terms of a contract are taken to reflect the parties’ intentions; only when a contract’s language is ambiguous does a court look to the parties’ intent. Here the Supreme Court followed a traditional rule of contract law: If a contract is ambiguous, proof requires evidence of what the parties intended, not what a court—in this case the appellate court—might infer from the ambiguous contract.

Two principles in Tackett should be especially relevant to reductions in retiree health-care benefits where the duration of these benefits is often unclear. The court, Justice Clarence Thomas wrote, supported the “traditional principle that courts should not construe ambiguous writings to create lifetime promises.” Similarly, he wrote that the court endorsed the traditional principle that “contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.”

This is where the Supreme Court’s decision is particularly significant for the public sector. There must be explicit proof that a collective-bargaining agreement intended long-term commitments to bind a city or state long past the incumbency of the public officials who signed the agreement.

Today elected officials trade generous retiree benefits in the future for current wages. By doing so, they avoid having to take responsibility for current cutbacks in state and municipal services that would accompany wage increases.

The Supreme Court’s ruling in Tackett means that lifetime benefits cannot be inferred but must be made explicit. As a result, if public officials now attempt to revise the benefits in a current or new collective agreement, unions will doubtless demand that any long-term promises be made explicit. But public officials who make these promises explicit send a strong signal that they are putting potentially enormous burdens on future taxpayers and elected officials. This makes it harder for current officials to make such promises. That is a step forward—not just in interpreting contracts but also in enhancing political accountability.

Mr. Pozen is a senior lecturer at Harvard Business School and a senior fellow at the Brookings Institution. Mr. Gilson is a professor of law at Columbia and Stanford law schools.

 


 


 


 


 


 


 


 

 


 




The Congressional Budget Office predicts that even if the Supreme Court rules in favor of the Whitehouse on subsidies, the ACA premius are going to soar over the next few years ---
http://www.washingtontimes.com/news/2015/mar/9/obamacare-premiums-spike-law-cheaper-expected/


In 2013 the Seventh Circuit Court ruled against Notre Dame in a case where the university objected to the contraception mandate in Obamacare. In 2015 the U.S. Supreme Court did not accept that ruling ---
http://hotair.com/archives/2015/03/09/scotus-throws-out-notre-dame-contraception-mandate-ruling/

. . .

Today, responding to an appeal of the ruling, the Supremes stepped into the fight and overturned their decision, sending the Seventh Circuit back to reconsider their call.

The justices asked the 7th U.S. Circuit Court of Appeals to reconsider its decision in favor of the Obama administration in light of the June 2014 Supreme Court ruling that allowed closely held corporations to seek exemptions from the provision.

The reference in their decision was, of course, to the Hobby Lobby ruling which has been written about here extensively. Once that one was in the books there were a number of lower court rulings which were bound to receive a fresh look or be changed entirely. That process already began in the fall when the Hitching Post case was essentially tossed down the memory hole without even fighting it in court, with the involved parties all citing Hobby Lobby in their decision.

This doesn’t end the case, of course, since the Seventh Circuit still has to actually comply with the order and go back to the drawing board. But given that the pressure here is from above them on the food chain rather than below, I’d expect a full retraction some time in the near future. Revise the scoreboard to read Notre Dame 2 – Obamacare 1.

Continued in article


"Rules and Resources for ACA Due Diligence," by Gerard Schreiber Jr., AICPA Insights, February 27, 2015 ---
http://blog.aicpa.org/2015/02/rules-and-resources-for-aca-due-diligence.html#sthash.0C3AuUPO.OSPYDCcd.dpbs

The filing season is upon us and the question practitioners are asking themselves is “What due diligence steps are necessary for getting Affordable Care Act information from clients?”

The ACA provides a new challenge to practitioners in preparing 2014 returns, which will require more due diligence and effort to comply with these new rules.

Continued in article

 


"Debt-Saddled Municipal Budgets Get a Lifeline:  A unanimous Supreme Court held that health benefits for retired workers can be renegotiated or reduced," by Robert C. Pozen And Ronald J. Gilson, The Wall Street Journal, March 1, 2015 ---
http://www.wsj.com/articles/robert-pozen-and-ronald-gilson-debt-saddled-municipal-budgets-get-a-lifeline-1425249172?tesla=y

While underfunded public-employee pensions capture the headlines, health-insurance benefits for retired state and local workers are also a huge problem. But a recent ruling by the Supreme Court may help state and local governments scale back these benefits.

Unlike public pension plans, retiree health benefits aren’t funded in advance; they are typically paid out of current tax revenues, so they compete with other budget priorities like schools and police. This competition will only grow more intense, as unfunded retiree health benefits are close to $1 trillion, according to a recent study in the Journal of Health Economics.

Several cities and states have tried to reduce the scope of retiree health-care services, or to increase the portion of the premiums paid by retired workers going forward. Public unions have frequently sued, claiming the benefits are vested for life—roughly parallel to the legal arguments the unions have made against efforts to curb future pension costs.

In late January, however, the Supreme Court issued an unanimous decision that will increase the chances of local governments winning such lawsuits. While the case involved a private business and its union, the principles should generally apply to public-sector agreements.

M&G Polymers vs. Tackett involved a collective-bargaining agreement that provided certain retirees, along with their surviving spouses and dependents, with a full company contribution toward the cost of their health-care benefits “for the duration of [the] Agreement.” The contract was subject to renegotiation after three years, but the critical legal question was whether the retirement health-care benefits continued even after the agreement expired—in effect whether the intent was to vest these benefits for life.

The union argued that the contract did vest these benefits for life and the Sixth Circuit Court of Appeals agreed. The Supreme Court reversed, noting that to prevail, the plaintiffs, in this case the union, had to supply concrete evidence—“affirmative evidentiary support”—that lifetime vesting of retiree health benefits was what both parties to the agreement intended.

Normally, the explicit terms of a contract are taken to reflect the parties’ intentions; only when a contract’s language is ambiguous does a court look to the parties’ intent. Here the Supreme Court followed a traditional rule of contract law: If a contract is ambiguous, proof requires evidence of what the parties intended, not what a court—in this case the appellate court—might infer from the ambiguous contract.

Two principles in Tackett should be especially relevant to reductions in retiree health-care benefits where the duration of these benefits is often unclear. The court, Justice Clarence Thomas wrote, supported the “traditional principle that courts should not construe ambiguous writings to create lifetime promises.” Similarly, he wrote that the court endorsed the traditional principle that “contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.”

This is where the Supreme Court’s decision is particularly significant for the public sector. There must be explicit proof that a collective-bargaining agreement intended long-term commitments to bind a city or state long past the incumbency of the public officials who signed the agreement.

Today elected officials trade generous retiree benefits in the future for current wages. By doing so, they avoid having to take responsibility for current cutbacks in state and municipal services that would accompany wage increases.

The Supreme Court’s ruling in Tackett means that lifetime benefits cannot be inferred but must be made explicit. As a result, if public officials now attempt to revise the benefits in a current or new collective agreement, unions will doubtless demand that any long-term promises be made explicit. But public officials who make these promises explicit send a strong signal that they are putting potentially enormous burdens on future taxpayers and elected officials. This makes it harder for current officials to make such promises. That is a step forward—not just in interpreting contracts but also in enhancing political accountability.

Mr. Pozen is a senior lecturer at Harvard Business School and a senior fellow at the Brookings Institution. Mr. Gilson is a professor of law at Columbia and Stanford law schools.

Bob Jensen's threads on accounting for pensions and post-employment benefits ---
http://www.trinity.edu/rjensen/Theory02.htm#Pensions


"Screwed by Seniors:  The people expected to pay for Social Security and Medicare can't afford it," by Veronique de Rugy, Reason Magazine, March 2016 ---
http://reason.com/archives/2015/02/06/screwed-by-seniors 

Remember Occupy Wall Street, when thousands across the country took to the streets, sleeping in tents to protest the ultra-rich 1 percent? The occupiers' frustration was real, but their ire was misdirected. They should have launched an Occupy the AARP movement instead.

Government policies that transfer cash from the relatively young and poor to the relatively old and wealthy are the real scandal. In 1970, Social and Medicare accounted for 20 percent of federal spending. They have since grown to 40 percent; by 2030, they will be more than half. And these numbers understate the level of federal spending for the elderly. According to the Centers for Medicare and Medicaid Services, some 28 percent of spending on Medicaid, a program designed to offer health care to families in poverty, goes to older Americans.

But these days, unlike in the era before Social Security and Medicare were created, most seniors are doing just fine, with various general indices of well-being all pointing to higher standards of living for the elderly. When Social Security was born in 1935, the average life expectancy was 65. Today, it's 78.8. In 1959, the U.S. Census Bureau found more than 30 percent of Americans 65 and older living below the poverty line. In 2013, the percentage had dropped to 9.5. According to a report by the Federal Interagency Forum on Aging-Related Statistics, the average net worth of Americans over the age of 65 increased by almost 80 percent between 1988 and 2008. Today's seniors are healthier, better educated, and richer than their predecessors.

Of course some seniors remain poor. But as the University of Chicago economist Bruce Meyer wrote in 2011, "Even over the past 10 years, those 65 and older with the lowest income are now living in bigger houses that are much more likely to be air conditioned and have appliances like a dishwasher and clothes dryer." And seniors aren't just doing well compared to previous generations; they're doing well relative to their younger counterparts.

In short, a group that's better off than ever before is receiving ever more generous benefits subsidized by younger, poorer Americans.

Looking at both consumption and income data to assess changes in living standards, Meyer and the Notre Dame economist James Sullivan find that Americans 65 and older have much lower poverty rates than most other demographic groups, and that these rates have fallen significantly faster for them than for other groups, too.

According to the Pew Research Center, as of 2009 "the typical household headed by an adult 65 or older had $170,494 in net worth, compared with just $3,662 for the typical household headed by an adult younger than 35." This is to be expected, since people generally accumulate assets and pay off debts as they grow older. But the authors were surprised to find that the gap has actually been widening. In 1984, when the Census Bureau began tracking these numbers, "the age-based wealth gap was 10:1. By 2009, it had ballooned to 47:1."

Sadly, this trend is not just a product of older Americans getting wealthier. Younger Americans are getting poorer. According to Pew, the net worth of households headed by people younger than 35 shrunk by 68 percent even as the net worth of households headed by people 65 and older grew by 42 percent. Meanwhile, a 2011 paper by Jeffrey Thompson of the University of Massachusetts Amherst and Timothy Smeeding of the University of Wisconsin–Madison shows that households whose head was under 34 were hit much harder during the recession than households headed by people in other age groups. Thompson and Smeeding also found that younger Americans recovered much more slowly from the damage.

And the situation will get worse as spending on Medicare and Social Security explodes. Without reforms today, vast tax increases will be needed to pay for the unfunded promises made to a steadily growing cohort of seniors.

Fortunately, numerous workable solutions are available to lawmakers. Way back in 2003, Cato Institute scholars Chris Edwards and Tad DeHaven listed several sensible reforms, including adding a system of personal savings accounts to Social Security, liberalizing Medical Savings Accounts, and making the latter permanent "to reduce health care costs by increasing competition between providers and making consumers more responsive to tradeoffs." These options are supposed to encourage families to save more, but also to use their money more responsibly and in a manner more consistent with their long-term needs. And since taxpayers remain in control of their cash, they can also pass it along if they don't use it all before they die—giving the next generation a head start when it comes to building assets.

In the September 2012 issue of reason, Reason TV's Nick Gillespie and I offered a more comprehensive option when we argued against having separate programs for the elderly and the poor. Because the important distinction is the inability to pay, not the age of the beneficiary, we suggested that "the most obvious, effective, and just approach is to end Social Security and Medicare and replace them with a true safety net that would help poor Americans regardless of age. To the extent that seniors qualify for income supplements, food stamps, and other transfer programs, they should be added to those rolls. They can also be added to Medicaid rolls (currently about 9 million seniors are so-called double-dippers, receiving benefits from both Medicaid and Medicare)."

Unfortunately, there is almost no appetite in Congress for even mild reforms of Social Security and Medicare. Most lawmakers won't touch entitlement programs, because older Americans vote. Driven by a desire to get re-elected, politicians refuse to reform the program at the core of our country's future fiscal woes.

Continued in article

Jensen Comment
In addition to paying seniors and the exploding population of people on Medicare that are declared disabled, taxpayers are on the hook for providing free medical services and medicines to the expanded rolls of Medicaid.

Over a fourth of the California population is now getting totally free medical services and medicines under Medi-Cal.
California's Medi-Cal program for "poor" grows to 12 million. --
http://www.sacbee.com/entertainment/living/health-fitness/article10317917.html

"The granny state:  Britain should stop subsidising the old and rich at the expense of the young and poor," The Economist, February 28, 2015 ---
http://www.economist.com/news/leaders/21645192-britain-should-stop-subsidising-old-and-rich-expense-young-and-poor-granny

INVOKING the spirit of the Blitz, Britain’s Conservative-led government says that, when it comes to austerity, Britons are in it together. Yet the group born under the shadow of the country’s wartime trials is largely exempt. Since 2010 the basic state pension has risen by 16%—5% in real terms—under a formula that guarantees generous increases whatever the economic weather. Pensioners also enjoy free TV licences, free bus passes and a handout to help pay winter fuel bills. The government even subsidises their savings, by offering bonds yielding 4% interest—more than five times its own borrowing cost—exclusively to the over-65s. And if the Tories are returned to power at the general election in May, oldies can expect more of this largesse. On February 23rd David Cameron, the Tory prime minister, promised to protect their handouts on the basis that “these people have fought wars, seen us through recessions—made this the great country it is today” (see article).

That argument is economically senseless and morally indefensible. Over the past five years, the average British household has seen its income fall by about £500 as a result of coalition tax increases and spending cuts. The average two-pensioner household has taken a hit of just £23. Yet far from being the shivering, uncomplaining veterans of Tory spin, its members more typically came of age in the easy-living 1960s. Buoyed by generous pensions and decades of soaring house prices, the wealthiest fifth of pensioner households enjoy average incomes well over twice the British average: for such lucky wrinklies, the winter-fuel allowance is less an inducement to turn on the radiator than an invitation to chambrer some decent wine. And as more British home-owners approach retirement, the numbers of rich pensioners will grow. The truth is Mr Cameron is motivated less by a desire to uphold the dignity of age than to bribe pensioners—the Britons most likely to vote Tory.

Contrast their treatment with that of younger Britons, whose taxes are paying for their pampered elders. Unlike state pensions, working-age handouts have been squeezed. Child benefit, previously a universal payment to parents, is now means-tested. The Tories have promised the young even more austerity, by making them work for unemployment benefits—which are already 21% less generous for the under-25s—and denying them housing benefit.

Coninuted in article

Bob Jensen's threads on entitlements ---
http://www.trinity.edu/rjensen/Entitlements.htm


Jensen Tax Question
Can the free-file software handle "special tax forms related to their health-care coverage?"

"H&R Block Helped Shape Obamacare, Now Set For Gigantic Payday." by  Nick Sorrentino, Townhall, February 26, 2015 --- Click Here
http://finance.townhall.com/columnists/nicksorrentino/2015/02/26/hr-block-helped-shape-obamacare-now-set-for-gigantic-payday-n1962430?utm_source=thdaily&utm_medium=email&utm_campaign=nl 

This is just off the top of my head.

And now we hear that H&R Block is poised to cash in big time (on its lobbying efforts for Obamacare) thanks to Obamacare. That’s awesome. Just what we need. Another corporate interest which will get in the way of simplifying the tax code.

(From The Daily Caller)

H&R Block’s decision to seek windfall profits from the Obamacare law also has riled some of its competitors, which are instead providing free help to low-income enrollees in filling out the complex tax forms.

Ryan Ellis, the tax policy director at Americans for Tax Reform and a former H&R Block senior preparer told TheDC that the company hopes to profit from the plight of Obamacare enrollees and those without health insurance who, for the first time, will have to file special tax forms related to their health-care coverage.

Ellis said the Obamacare participants are the “real target audience. It’s an alignment of interest.

Click here for the article.

Jensen Comment
Since a huge percentage of ACA insured have reported incomes low enough to file free using H&R Block or related free-file software I'm not certain that H&R Block stands to gain as much as the above article applies, especially for those insured by ACA exchanges --- Click Here
https://www.taxact.com/registration.asp?new=1&type=0&return_type=STD&product_type=1&at=0&l=v1o1w2x2y2z1&sc=1404263901048c&kw=sitelink-File Now Free-Taxact&ad=0&dev=c&utm_medium=cpc&src=google&gclid=CI3d1-Dt_8MCFWQV7Aod3RwAvA&mpch=ads&utm_source=google&utm_campaign=1404263901048c&utm_term=sitelink-File Now Free-Taxact

There are also software options for free filing at any income level, but these do not apply to complicated returns.

11 Options for Filing Tax Returns for Free (if joint income is less than $57,000 or your single-taxpayer income is less than $31,0-00))---
http://www.foxbusiness.com/personal-finance/2013/02/07/11-options-for-filing-tax-returns-for-free/

Jensen Tax Question
Can the free-file software handle "special tax forms related to their health-care coverage?"


"Justice Kennedy Has Strong Questions for Obamacare Challengers," by Greg Stohr, Bloomberg, March 4, 2015 ---
http://www.bloomberg.com/news/articles/2015-03-04/obamacare-subsidy-dispute-divides-u-s-supreme-court-justices?cmpid=BBD030415&alcmpid=

. . .

Kennedy said repeatedly that the coercion of the states might create a constitutional problem. At another point, however, he indicated a problem with the government’s approach.

“It seems to me a drastic step for us to say that the Department of Internal Revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here?” Kennedy said.

Kennedy is one of the court’s staunchest advocates of states’ rights. One lawyer who filed a brief opposing the tax credits said the justice’s questions indicated his vote is up for grabs.

“He is the big question mark,” said Cory Andrews of the Washington Legal Foundation. “That’s the big takeaway from today.” Legal Injury

Justice Ruth Bader Ginsburg pressed both Carvin and Verrilli about whether any of the four plaintiffs in the case has suffered the type of legal injury that entitles a person to sue.

White House spokesman Josh Earnest told reporters it would be “unwise” to draw conclusions from the justices’ questions during the argument.

If the court ruled against the subsidies, “prices would likely go through the roof,” Earnest said. “This is a fundamental part of the Affordable Care Act, and it’s at risk.”

The House and Senate’s Republican majorities oppose Obamacare, and they also “struggle mightily” to accomplish even popular goals such as funding the Department of Homeland Security, Earnest said.

Hospitals rose the most on the Standard & Poor’s 500 Index on Wednesday, as of 1:56 p.m. in New York. Tenet Healthcare Corp. was up 4.9 percent to $49.35, and HCA Holdings Inc. gained 5.6 percent to $74.77. Community Health Systems Inc. advanced 5.1 percent to $52.12.

The case is King v. Burwell, 14-114.

"Justice Scalia trashes how the Obamacare law was written," by Erin Fuchs, Business Insider, March 4, 2015 ---
http://www.businessinsider.com/antonin-scalias-comments-during-obamacare-oral-arguments-2015-3

The Supreme Court heard oral arguments Wednesday in the latest dispute over President Obama's signature healthcare reform law, and Justice Antonin Scalia trashed how the law was written.

"This is not the most elegantly drafted statute," Scalia said during oral arguments. "It was ­­it was pushed through on expedited procedures and didn't have the kind of consideration by a conference committee, for example, ... that statutes usually do."

The latest debate over Obamacare turns on whether the US can subsidize insurance for people living in the 34 states with exchanges that were set up by the federal government. Scalia, like most of the other conservative justices, is expected to rule with the opponents of Obamacare.

The case famously involves just four words of the law. One part of Obamacare says people who buy insurance through marketplaces "established by the state" get subsidies; opponents say that means people living in states with marketplaces set up by the federal government don't get subsidies.

Indeed, a literal reading of that section of the law would suggest that people in the 34 states without state-run exchanges wouldn't get subsidies. However, that reading of the law means that an estimated 8 million people will lose their health insurance; that's probably not what Congress intended.

Why didn't the law include four more words to the clause regarding subsidies ("or through the federal government")?

Scalia — who described the law's "imperfections" — may have a point. The 800-page bill might not be perfect.

Still, the Affordable Care Act might withstand this latest round of scrutiny if potential swing voters Justice Anthony Kennedy or John Roberts vote to save it.

In 2012, Roberts surprised many people by upholding another key part of Obamacare: the mandate that most people buy insurance or pay a penalty. The court is expected to issue a decision in the recent case by June.


Read more: http://www.businessinsider.com/antonin-scalias-comments-during-obamacare-oral-arguments-2015-3#ixzz3TWVFmOWZ
 

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


Paul Krugman Asserts Obamacare is a Roaring Success --- No Major Problems With I
http://krugman.blogs.nytimes.com/2015/02/18/the-mystery-of-moore/

From DakirSmith comment at
http://nymag.com/daily/intelligencer/2015/02/obamacare-hater-cant-find-single-true-fact.html

Problems with obamacare:

1. Sky high deductibles compared to pre-ACA.

2. Sky high out of pocket maximums for OUT OF NETWORK. Several plans I looked at were $12,700 max. out of pocket for individuals $25,000 for a family. How many know your doctor at an in network hospital can be out of network? (Didn't think so.)

3. Subsidies. Wealth redistribution 101! Paid directly from the treasury? I thought it was a tax? Corporate wealthfare!

4. High coinsurance.

5. Mostly HMOs.

6. Estimated 26 million will get obamacare exemptions and 4 million still can't afford health insurance under ACA. That is 30 million. SAME AS BEFORE ACA!

7. How many have thousands saved to cover the out of pocket limits or deductibles? Government backed loans coming soon. Just like student loans. Welcome to more debt.

8. It's not paid for. 18 trillion in debt and we hand out a new entitlement? We haven't covered SS or Medicare yet.

9. Many working poor can't get subsidies - income too low and are forced into Medicaid they don't want.

10. Many obamacare co-ops are bankrupt.

11. It's racist and discriminatory. Higher income - typically whites get better options platinum and gold plans with lower out of pocket and deductibles while low income - typically minorities get bronze or silver with sky high maxs.

12. Why different metal levels? If we are all equal shouldn't we all have the same insurance and pay the same for it???

Jensen Comment


Obamacare Cadillac Tax on High Quality Medical Insurance Plans ---
http://www.journalofaccountancy.com/news/2015/feb/high-cost-health-plans-201511869.html

"IRS asks for comments on proposed rules for high-cost health plans," by Sally P. Schreiber, Journal of Accountancy, February 24, 2015 ---
http://www.journalofaccountancy.com/news/2015/feb/high-cost-health-plans-201511869.html

To prepare for the new excise tax on so-called Cadillac high-cost health insurance plans, the IRS is asking for comments on proposed approaches to creating guidance on issues involving the tax when it becomes effective in 2018 (Notice 2015-16). The notice focuses on the definition of “applicable coverage,” how to determine the cost of applicable coverage, and applying the annual dollar limit to the cost of applicable coverage. The notice does not discuss calculation or assessment of the tax, but the IRS says that, before issuing proposed regulations, it expects to release another notice that will invite comments on those issues.

Sec. 4980I, enacted as part of the Patient Protection and Affordable Care Act, P.L. 111-148, imposes an excise tax on insurers (including employers with self-funded plans) if the aggregate value of employer-sponsored health insurance coverage for an employee (including, for purposes of the provision, any former employee, surviving spouse, and any other primary insured individual) exceeds a threshold amount. The tax is equal to 40% of the excess benefit, i.e., the aggregate value that exceeds the threshold amount. For 2018, the threshold amount is $10,200 for individual coverage and $27,500 for family coverage, multiplied by the health cost adjustment percentage (as defined in Sec. 4980I) and increased by the age and gender adjusted excess premium amount (also defined in Sec. 4980I).

Sec. 4980I(d)(1)(A) provides that applicable coverage means coverage under any group health plan the employer makes available to the employee that is excludable from the employee’s gross income under Sec. 106 (or would be if it were employer-provided coverage). The cost of applicable coverage is determined under the same rules that apply to Sec. 4980B for COBRA continuation coverage.

The IRS explained that, to determine the cost of applicable coverage, it anticipates that employer contributions to health saving accounts (HSAs) and Archer medical savings accounts (Archer MSAs), including salary reduction contributions, will be included in applicable coverage, and employee after-tax contributions to those accounts will be excluded.

In addition, the cost of on-site medical clinics will be included in applicable coverage only if they provide benefits beyond first aid to employees during working hours, although the IRS is requesting comments on how to determine whether the costs of these clinics should be included.

The IRS is also requesting comments on its proposal to exercise its regulatory authority to exclude the cost of employee-assistance programs from the cost of applicable coverage under Sec. 4980I, even though they are not specifically excluded under the statute.

Finally, the notice contains an in-depth discussion of how to determine the cost of applicable coverage under the proposed rules, which will be similar to the rules for determining the cost of coverage under COBRA. The cost of that applicable coverage for an employee will be based on the average cost of that type of applicable coverage for similarly situated employees.

Jensen Comment
What is truly unfair about the Cadillac Taxes the way President Obama exempted some organizations like labor unions from having to pay the tax on their employees as well as those high quality medical insurance plans paid for Federal Government employees.

The real advantage of a Cadillac plans are that they sometimes provide access to the highest quality doctors and hospitals that will not accept the lower quality ACA-insured patients. Or alternately the higher quality plans might let patients be scheduled sooner for elective procedures such as new knees, hip, and shoulders.

Many national health plans have two options that can lead to differential quality of coverage. For example, in Germany there's the "free" national health plan paid by taxpayers and the private plan supplements paid by patients that can afford to pay for added insurance.

Health Insurance in Germany --- http://www.toytowngermany.com/wiki/Health_insurance

In other nations physicians and hospitals cannot be paid more than what the national health plans will pay. Or they may not be able to provide faster service for such things as new knees, hips, and shoulders. Price fixing in this manner often leads to longer waits and/or poorer quality service for everybody when price-controlled pricing discouraging students for spending 12 or more years in medical schools to become specialized physicians.

Price Fixing generally leads to one of more of these three unhappy events":

  1. Reduction in quality of service such as bait and switch substitution of physicians assistants for MDs in general practitioner offices
  2. Shortage of goods and services such as the empty shelves in Venezuela
  3. Soaring black market prices such as the $700 condom packets in Venezuela

For USA for persons covered by ACA insurance, prices of physician services were fixed relatively low in order to both reduce the premium subsidies and keep premium rates affordable, because higher premiums more and more people would opt out of coverage.

"How Obamacare Is Ruining Health Insurance," by John C. Goodman, Forbes, February 11, 2015 ---
http://www.forbes.com/sites/johngoodman/2015/02/11/how-obamacare-is-ruining-health-insurance/

The health insurance market is changing. And the changes are not good. Even before there was Obamacare, most insurers most of the time had perverse incentives to attract the healthy and avoid the sick. But now that the Affordable Care Act has completely changed the nature of the market, the perverse incentives are worse than ever.

Writing in Sunday’s New York Times Elizabeth Rosenthal gives these examples:

But aren’t these insurers worried that if they mistreat their customers, their enrollees will move to some other plan? Here’s the rarely told secret about health insurance in the Obamacare exchanges: insurers don’t care if heavy users of medical care go to some other plan. Getting rid of high-cost enrollees is actually good for the bottom line.

To appreciate how different health insurance has become, let’s compare it to the kind of casualty insurance people buy for their home or their cars.

Dennis Haysbert is the actor I remember best for playing the president of the United States in the Jack Bauer series, 24.  You probably know him better as the spokesman for Allstate. In one commercial he is standing in front of a town that looks like it has been demolished by a tornado. “It took only two minutes for this town to be destroyed,” he says. And he ends by asking “Are you in good hands?”

The point of the commercial is self-evident. Casualty insurers know you don’t care about insurance until something bad happens. And the way they are pitching their products is: Once the bad thing happens, we are going to take care of you.

Virtually all casualty insurance advertisements carry this message, explicitly or implicitly. Nationwide used to run a commercial in which all kinds of catastrophes were caused by a Dennis-the-Menace type kid. In a State Farm ad, a baseball comes crashing through a living room window. Nationwide’s “Life comes at you fast” series features all kinds of misadventures. And of course, the Aflac commercials are all about unexpected mishaps.

My favorite casualty insurer print ad is sponsored by Chubb. It features a man fishing in a small boat with his back turned to a catastrophe. He is about to go over what looks like Niagara Falls. Here’s the cutline: “Who insures you doesn’t matter. Until it does.”

Now let’s compare those messages to what we see in the health insurance exchange. Federal employees have been obtaining insurance in an exchange, similar to the Obamacare exchanges, for several decades. Every fall, during “open enrollment,” they select from among a dozen or so competing heath plans. In Washington, DC where the market is huge, insurers try to attract customers by running commercials on TV, in print and in other venues.

Continued in article

The Case Against Obamacare: An eBook From Forbes
Don’t be fooled. The new health law has disrupted coverage for millions, and driven up costs for millions more.


Reducing CO2 today by breathing one less time per minute. If we all do it, we can make a difference. #ClimateMondays
Pat Sajak

And we always thought Vanna White was the dumb one on Wheel of Fortune
It's sad to think Pat Sajak was allowed to have children
He's almost dumb enough to run for Congress (on the GOP ticket)

Notable & Quotable: Pat Sajak
http://www.wsj.com/articles/notable-quotable-pat-sajak-1425942983?tesla=y

From “Wheel of Fortune” TV host Pat Sajak’s @patsajak’s twitter feed.

March 6: Why all this talk about Clinton emails when @ScottWalker didn’t graduate from college?

March 6: 20,000 sledding accidents annually! President must act with or without Congress! Ban sleds now! #DoItForTheChildren

Feb. 27: New rule: you can’t trust research financed by corporations. Only government-funded research is pure and unbiased.

Feb. 23: Reducing CO2 today by breathing one less time per minute. If we all do it, we can make a difference. #ClimateMondays

Feb. 21: 1965 activist: “I marched in Selma.” 2015 activist: “I held up a sign and posted it on Twitter.”

Feb. 20: Bad climate news. The hockey stick is frozen solid.

Feb. 15: Weather isn’t climate. Weather can be colder but climate warming. Climate is warming whether the weather is…um, uh...

Jan. 29: When a politician begins a sentence with, “What the American people want…,” it’s time to change the channel.

Jan. 10: Tried to pay for lunch with a carbon credit. Had to switch to Visa.

Dec. 22: Reports: U.S. may put N. Korea back on the list of states that sponsor terrorism. OMG! THE LIST! NOT THE LIST!!!

Nov. 18: Thinking of bypassing the wheel & the puzzles, and determining winners by executive action. Will save a lot of time.

Nov. 16: Gruber has shined a light on the disdain many self-proclaimed champions of “the little people” have for those people.

Nov. 5: So, you run against someone’s policies & you win, and that’s a sign the voters want cooperation & compromise? Uh, OK.



 




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

Bob Jensen's Tidbits Archives ---
http://www.trinity.edu/rjensen/tidbitsdirectory.htm 

Bob Jensen's Pictures and Stories
http://www.trinity.edu/rjensen/Pictures.htm

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---
http://www.trinity.edu/rjensen/Fraud001.htm

Current and past editions of my newsletter called Fraud Updates ---
http://www.trinity.edu/rjensen/FraudUpdates.htm

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---
http://www.trinity.edu/rjensen/FraudConclusion.htm

Bob Jensen's threads on auditor professionalism and independence are at
http://www.trinity.edu/rjensen/Fraud001c.htm

Bob Jensen's threads on corporate governance are at
http://www.trinity.edu/rjensen/Fraud001.htm#Governance 

 

Shielding Against Validity Challenges in Plato's Cave ---
http://www.trinity.edu/rjensen/TheoryTAR.htm

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---
http://www.trinity.edu/rjensen/theory01.htm#WhatWentWrong

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---
http://www.trinity.edu/rjensen/theory01.htm#DoctoralPrograms

AN ANALYSIS OF THE EVOLUTION OF RESEARCH CONTRIBUTIONS BY THE ACCOUNTING REVIEW: 1926-2005 ---
http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm#_msocom_1

Bob Jensen's threads on accounting theory ---
http://www.trinity.edu/rjensen/theory01.htm

Tom Lehrer on Mathematical Models and Statistics ---
http://www.youtube.com/watch?v=gfZWyUXn3So

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---
http://www.trinity.edu/rjensen/FraudConclusion.htm#BadNews

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/