Obama to Boehner: “John, I’m Getting Tired of Hearing You Say That”

This was President Obama’s reply, during fiscal cliff negotiations, when House Speaker John Boehner declared, for the umpteenth time, that “ The U.S. has a spending problem.” 

I can understand the president’s irritation. How could anyone believe that we have a “spending problem?’

Look around. Consider the state of our bridges, our roads and our crumbling inner city public schools. Are we spending too much on the nation’s infrastructure?

Next, think about unemployment. During this recovery we have lost 750,000 public sector jobs.  Republicans are intent on “starving the beast” (of government) and as a result Washington has not given states the financial support they need continue delivering public services. Across the nation, public school teachers have been laid off in droves, while class sizes increase at unprecedented rates.  Does this sound like government spending run amuck?

One in five American children now lives in poverty. Seventeen million children find themselves in homes where they can’t be sure of getting enough to eat.  (a.k.a. “food-insecure households.”)  At the end of the month, many kids go to bed hungry because the government Food Stamps program (now known as Supplemental Nutrition Assistance Program, or SNAP)  gives families less than $1.50 per person per meal. Are we being overly generous?

During the past two wars, we sent millions of American men and women to Iraq and Afghanistan –many went back for repeated tours. In some cases, their bodies were not  broken–but their minds were.  Now 1.3 million Vets seeking mental health services are told they must wait of 50 days before getting treatment.   A recent government report suggests that 22 Vets die by suicide every day – about 20 percent of all Americans who kill themselves. Are we spending too much on healthcare for Veterans?

Let me suggest that we don’t have a spending problem. We have a revenue problem. Current federal revenue levels are at their lowest levels since the 1950s. 

                      How Anti-Tax Pledges Have Weakened the Nation

In a recent post, Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, nailed it: “The tax system doesn’t raise enough revenue.  And that’s not just the recession; it’s also tax policy and anti-tax pledges  . . . The system has become less progressive, with the largest declines in effective tax rates at the top of the income scale.

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Subsidies: Will You Receive a Tax Credit to Help You Buy Insurance in 2014? How Much?

Beginning in 2014, millions of Americans will discover that they qualify for subsidies designed to help them purchase their own health insurance. The aid will come in the form of tax credits, and many will be surprised by how generous they are.

Not only low-income, but moderate-income families earning up to 400 percent of the federal poverty level (FPL) – currently $44,680 for a single person and $92,200 for a family of four – will make the cut.

Yesterday, I posted about subsidies on healthinsurance.org. The post includes a calculator which tells you whether you would be eligible, and how much you would receive. Even if your employer offers health benefits, you might qualify for a tax credit  if the plan too expensive, or too skimpy. (I explain how the government defines those terms.) I also explain how the government calculates subsidies, and what happens if you live a place where healthcare is particularly expensive.

Click here for the full post   If you like, come back here to comment.

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Obama Wins Round One of Budget Negotiations

CNN is reporting that the “Fiscal cliff deal is down to wrangling over the details.” While others in the media continue to say that talks are stalled, everything I know about both the economics and the politics of the situation tells me that CNN is right.

At 4:30 this afternoon, CNN updated its story: “Both sides agree the wealthy will pay more, so now fiscal cliff  talks come down to how much Republicans can wring out of the White House in return for giving in on taxes.

“To President Barack Obama, it’s all about first locking in additional revenue from raising taxes on high-income owners, an outcome the GOP has long rejected.”

President Obama had made it clear that negotiations over government spending on safety nets such as Medicare wouldn’t begin until Republicans accepted a higher marginal tax rate for individuals earning over $200,000 and couples earning over $250,000.

The president dug in, and, according to CNN, he has won round one.

“Retiring Republican Rep. Steve LaTourette of Ohio told CNN on Thursday that he sensed a shift in the House GOP approach during a conference meeting the day before.

“A GOP source told CNN that talks between staff members on both sides resumed Thursday for the first time this week, after Obama and Boehner spoke by phone the day before.”

A Two-Step Approach

It is not clear whether negotiations over so-called “entitlements” will be concluded before the end of the year. But CNN, reports

“All signs point toward a two-step approach sought by newly re-elected Obama — an initial agreement that would extend lower tax rates for income up to $250,000 for families, while letting rates return to higher levels from the Clinton era on income above that threshold.”  That agreement on taxes will be signed and sealed before the end of the year.

“Even conservatives such as Oklahoma Sen. Tom Coburn and Louisiana Gov. Bobby Jindal acknowledge the obvious — taxes on the wealthy are going up despite opposition by Republicans.

“‘Whatever deal is reached is going to contain elements that are detrimental to our economy,’ Jindal wrote Thursday in an opinion piece published by Politico. ‘Elections have consequences, and the country is going to feel those consequences soon.’”

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Can U.S. Businesses Afford Obamacare?

No doubt you have heard that the Olive Garden, Denny’s and Papa John’s Pizza all are slapping an “Obamacare surcharge” on the price of their products.  They claim they have no choice.

But the news that Americans might pay 50 cents more for a mediocre $10 meal at the Olive Garden is not what bothers me most. Since President Obama was re-elected each of these restaurant chains have announced that they also plan to cut many full-time workers’ hours back to less than 30 hours a week in order to duck the cost of providing health care benefits.. This means that employees who are now working 40 hours a week will have to look for a second job—or find a way to support themselves on less than three-quarters of their current salary.

Michael Tanner, a fellow at the conservative Cato Institute, argues that companies outside the restaurant business also will be forced to down-size. Just a few days ago, Tanner wrote: “While restaurants are especially vulnerable to the cost of Obamcare other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China. And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it too is exploring ObamaCare-related layoffs.”

Obamacare will  “keep unemployment high,” Tanner claims, because under reform legislation, businesses that have at least 50 employees working over 30 hours a week are expected to offer their workers affordable health insurance. If they choose not to, and more than 30 of their employees qualify for government subsidies to help them purchase their own coverage, the employer must pay a penalty of $3,000 for each worker who receives a subsidy— up to a maximum of $2,000 times the number of the company’s full-time employee minus 30. (The Kaiser Family Foundation offers an excellent graphic explaining the rule.) 

By paying the fine, the employer is, in effect, paying a share of a tax credit that would cost the government anywhere from roughly $1,700 for a single young worker  to over $12,000 to help the average 35-year-old worker who has a spouse, two children, and reports $35,000 in total household income.

Conservatives like Tanner argue that that is unfair, and that small businesses– “the engine of job growth”– will be hit hardest.  

What they  don’t do is look at the math:

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The Democratic National Convention, 1980 and 2012: Turning Points in American History

I originally published this post on HealthInsurance.org (www.healthinsurance.org) Check there for other posts on the election–just click on “Blog” at the top of the page.

Ted Kennedy’s speech at the 1980 Democratic convention still echoes in my mind. It remains the finest, most inspiring political oration that I have ever heard. Kennedy was speaking from a position of defeat. He had just lost the Democratic nomination to Jimmy Carter.

And yet this was a full-hearted, rousing speech delivered by a man who realized that in the battle ahead, the issues at stake were far, far more important than his own loss. Intuitively, he knew that the country had reached a turning point. (You can listen to the speech at The  History Place.

At that moment, Conservatives were ready to launch a revolution, and they would succeed. In November, Ronald Reagan won the White House, and his administration would set the tone for much of the next 30 years. Tax cuts for the rich, deregulation, a campaign to privatize both Social Security and Medicare. Health care reform would be off the table for many years.

Kennedy saw the danger ahead and addressed it: “My fellow Democrats and my fellow Americans, I have come here tonight, not to argue as a candidate but to affirm a cause. I’m asking you–to renew the commitment of the Democratic Party to economic justice.

“I am asking you to renew our commitment to a fair and lasting prosperity that can put America back to work.” Then, as now, unemployment was a pressing issue. In April of 1980, the unemployment rate jumped to 6.9%; in May it hit 7.5%.  “Let us pledge that employment will be the first priority of our economic policy,” Kennedy declared. “We will not compromise on the issue of jobs.”

Universal Coverage “The Passion of My Life”

Kennedy understood that “we cannot have a fair prosperity in isolation from a fair society. So,” he declared, “I will continue to stand for a national health insurance.”

“We must not surrender to the relentless medical inflation that can bankrupt almost anyone and that may soon break the budgets of government at every level. Let us insist on real control over what doctors and hospitals can charge, and let us resolve that the state of a family’s health shall never depend on the size of a family’s wealth.”

Kennedy had witnessed what economic inequality can mean when a child is sick.  Many years later he recalled “One of the searing memories in my life was being in a children’s hospital in Boston, where my son had lost his leg to cancer. He was under a regime that was going to take three days of treatment, every three weeks, for two years …
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The Truth about the Politics of National Health Reform

For the past year, progressives have begun to talk about health care reform as if it is inevitable. Listen to the Democratic Party’s presidential candidates, and it seems just a question of what form the health care revolution will take, how quickly it will happen, and how we’ll finance it. After all, the polls show that the majority of taxpayers, employers and even most doctors want to see a major change.  Moreover, health care research shows that if we cut the waste in our system, we could fund universal coverage. What, then, is stopping us?

As regular readers know, I recently attended a Massachusetts Medical Society Leadership Forum where what I heard about the Massachusetts plan made my heart sink. While everyone in Massachusetts wants health care reform, no one wants to pay for it. Those who are receiving state subsidies to buy insurance are enthusiastic. But uninsured citizens earning more than 300% of the poverty level are expected to purchase their own insurance. The state hoped that 228,000 of its uninsured citizens would sign up; as of last month, just 15,000 had enrolled. Many have decided that they would rather pay the penalty than buy health insurance.

At the forum, Robert Blendon, professor of health policy and political analysis at Harvard’s Kennedy School of Government, talked about what Massachusetts’ experience might mean for the national health care debate: “Massachusetts is the canary in the coal mine,” Blendon, who is also a professor at Harvard’s School of Public Health, declared bluntly. “If it’s not breathing in 2009, people won’t go in that mine.”  If the Massachusetts plan unravels, he suggested, Washington’s politicians will say “If they can’t do it in a liberal state like Massachusetts, how can we do it here?” 

I’m not writing Massachusetts off. The state’s leaders are behind the plan and they may be able to persuade the Commonwealth’s citizens to come on board. But it won’t be easy. 

In the meantime, this week I decided to ask Blendon some follow-up questions: Just what would it take, politically, to achieve national health care reform sometime in the next two to four years?  How many seats would reformers have to capture in Congress?  Is this likely?   Some observers say that if a reform-minded president hopes to succeed, he or she will have to ram a plan through Congress sometime in 2009. But health care is complicated; wouldn’t it make more sense for a new administration to take its time and explain what it is doing to the public, while trying to create a sustainable, affordable, high quality health care system?

Finally, what are the biggest barriers to reform?  If major change proves impossible, what more modest back-up plans should a new president have in mind? What other health care legislation could he or she hope to pass?

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HILLARY CLINTON’S NEW PLAN

   I have written two posts analyzing Hillary Clinton’s healthcare plan. You will find them on www.tpmcafe.com (where I am a contributor). You can comment there.

   

    

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