Category Archives: Econ & Money

Citizens Insurance Won’t Be Making Sweetheart Loans to Dodgy Insurance Companies After All

Citizens Insurance planned to use our premiums to make GIFTS to private insurance companies. Well, it seems the bright boyos at Citizens paid Goldman Sachs a great deal of money to explain how it would work, and they explained that it wouldn’t work as none of the potential participants were solvent enough to be trusted with any money, so the plan is off the table at least for this year. See The Buzz for the details, Citizens to abandon loan program for private companies, floats new ‘clearinghouse’ idea. (How do I know Goldman Sachs was paid a lot of money when the article doesn’t say? Simple: it’s Goldman Sachs.)

This of course has nothing to do with the increasing ethical quicksand gradually engulfing the management at Citizens in which we’ve learned that Citizens fired all four members of its “integrity team” while they were investigating allegations of sexual harassment, indecent drunken behavior in public, questionable payments and falsified documents. Things got so bad that Gov. Rick Scott said he wants Citizens Insurance to have an inspector general — think about it: there’s a state body so corrupt that Rick Scott thinks it needs investigating and cleaning up! That’s a scary concept. But do not fear, the earth still revolves around the sun: the Governor is in no hurry to do anything. So that’s alright then.

Posted in Econ & Money, Florida, Politics: The Party of Sleaze | Comments Off on Citizens Insurance Won’t Be Making Sweetheart Loans to Dodgy Insurance Companies After All

There Ought to Be a Law

How can it be that there is no remedy for this sort of theft? Hostess took workers' pension money to fund itself:

Of all the outrages Hostess has committed against its workers, this may take the cake. In August, 2011, the company just stopped contributing to its workers’ pensions, and is now acknowledging that it instead used the money for operational expenses. The money that didn’t go into pension funds was money that the workers had bargained for and chosen to take as pension instead of wages. But that doesn’t mean there’s anything they can do about it:

At the very least we should put promised past pension contributions higher up in the queue in bankruptcy. (Underfunded future promises is a harder question I haven’t thought through.) It certainly ought to come ahead of management bonuses.

Posted in Econ & Money | 5 Comments

In Which I Engage in a Pointless Farce

Today President Obama unleashed the kraken: he emailed everyone on his email list encouraging them to contact their elected representatives to ask them to sign the discharge petition about extending the Bush tax cut earnings less than the top 2%. I decided to make a call, even though I knew, given who my representative is, just how pointless that is.

Here’s the note I got:

Date: Mon, 10 Dec 2012 11:13:07
From: “Stephanie Cutter, BarackObama.com”
To: A Michael Froomkin < >
Subject: Help the President with just one phone call
Parts/Attachments:
1 OK ~127 lines Text
2 Shown ~218 lines Text
—————————————-

Obama – Biden
A. Michael —

Who will decide if your taxes increase in just 22 days? A few dozen members of the House of Representatives, that’s who.

Cutting taxes for the middle class shouldn’t be difficult, especially when Republicans claim they agree with the President on the issue. But some Republicans are still holding middle-class tax cuts hostage simply because they want to cut taxes for millionaires and billionaires.

Here’s what’s going on right now: President Obama is asking Congress to move forward on a plan that would prevent 98 percent of American families from paying higher taxes next year. The Senate has passed that bill, and the President is ready to sign it — but the Republican leadership in the House of Representatives won’t even bring the bill to the floor for a vote. House Democrats have filed a petition that would force a vote if it attracts 218 signatures.

If a bill has enough votes to pass, Congress should vote on it and pass it. It’s a pretty simple proposition. And every Member of Congress who hasn’t signed on to keep taxes low for the middle class needs to hear from you.

Call your representative today and ask them to sign the petition in support of a vote. According to our records, here’s who you should call:

Representative Ileana Ros-Lehtinen
(202) 225-3931

Not your representative? Call the switchboard operator at 202-224-3121. Not sure who your representative is? Click here to look it up. [my.barackobama.com]

Here’s a suggestion on what to say — feel free to improvise and let your representative’s office know why you’re personally supporting the President’s plan:

“Hi, I’m A. Michael. As a voter from your district, I support the President’s plan to extend tax cuts for 98 percent of American families — $2,000 a year means a lot to me and to middle-class families here in Florida. I urge Representative Ros-Lehtinen to sign the petition forcing the House to vote on the Senate-passed bill, and to vote “yes” if it reaches the floor.”

Once you’ve called your representative’s office, please report back and let us know how it went:

http://my.barackobama.com/Report-Your-Call

Let’s get one thing straight: If your taxes go up, Republicans will have made a conscious choice to let that happen. They’ll have missed the opportunity to prevent it, just to cut taxes for the wealthy.

Republicans need to stop using the middle class as a bargaining chip. If they fail to act, a typical middle-class family of four will see a $2,200 tax hike starting in a few short weeks. Middle-class families could face some tough financial decisions simply because Republicans didn’t want to ask the wealthiest 2 percent of Americans to pay their fair share.

That’s not what President Obama and you campaigned on, and that’s not what millions of Americans voted for just one month ago.

We know we can affect change in Washington when we raise our voices together. So pick up the phone and make a call — your representative needs to hear from you.
Here’s who to call, one more time:

Representative Ileana Ros-Lehtinen
(202) 225-3931

Thanks,

Stephanie

Stephanie Cutter
Deputy Campaign Manager
Obama for America

P.S. — Don’t forget to tell us you made your voice heard. Report back here.
http://my.barackobama.com/Report-Your-Call

As the folks at Daily Kos correctly note, campaigns like this don’t win friends in Congress as they don’t like to be inundated with phone calls … which suggests that the private talks with Speaker Boehner are not going well — hardly a surprise.

So here is how it went. I said my piece, not following the Obama script, and was politely thanked for my views by “Chris”. “We’ve been getting a lot of calls about this issue today,” he said.

What, I asked as if I didn’t know, was Congresswoman Ileana Ros-Lehtinen’s position on the discharge petition. My feigned ignorance met equal ignorance (also feigned?) on the other side of the line: ‘I don’t know.’

How might I find out when the Congresswoman decides, I asked. ‘When the vote happens I guess,’ Chris answered.

Now, since I was calling about signing a discharge petition that wasn’t a very good answer. So I asked if he knew what a discharge petition was, and Chris claimed not to know. So I explained what a discharge petition is, and asked my question again.

‘I don’t know her position on this, I don’t work on those issues,’ said the dogged and still polite Chris. If he’s just an intern, he’s a real find. Everyone knows Ros-Lehtinen’s position: Hell will suffer from water solidification before she bucks her leadership and signs this discharge petition. But why risk annoying a constituent by telling him that?

In the end he offered me the email address of Ros-Lehtinen’s senior Legislative Aide, who I’m sure would just be delighted to hear from me. I don’t know that I’ll even bother.

Very hard to see what all that achieved. But I have to give props to Chris who, while being clueless or faking it well, was totally polite.

I submitted a very abbreviated version of the above to the Obama response site, and was oddly disheartened to be rewarded with an invitation to send him money.

Posted in 98%, Econ & Money | Comments Off on In Which I Engage in a Pointless Farce

Please Help a Conservative Escape Epistemic Closure

I went to have my routine eye exam today, and the ophthalmologist, an educated man and small-business owner (he runs his practice with his son), was — as he often does — channeling the Wall Street Journal editorial page’s view of the world. Today the heartfelt worry was that the Deficit Will Devour Us All, especially if we fall off the Dreadful Fiscal Cliff.

I attempted to point out that he could relax because on day one the so-called Fiscal Cliff (1) doesn’t do dramatic changes [although I should have added it stops extended unemployment payments, which is a bit drastic], and (2) fully implemented it lowers the deficit, which should have made him happy about his deficit worries. But, no, he said, then people won’t have any money. My attempts to suggest this argued for stimulus spending (and bigger deficits in the short run) failed to crack through what he knew was true: deficits are bad because they cause inflation, and the Fiscal Cliff is bad because it reduces spending money in the economy, and these ideas are not in tension. (Note please that I wrote “not in tension” rather than “utterly incompatible” as there might be some way to reconcile them, but that’s not what he was trying to do.)

As we parted, my ophthalmologist asked for some things to read “to hear the other side”. So I’m putting together a list for him, version 0.1 of which appears below. Please help me improve this list — keeping in mind he primarily wants economics-oriented readings for a non-economist.

Economic readings for the perplexed

  1. Basic facts about the causes of deficit: wars and tax cuts (CBPP)
  2. The real nature of that “crushing” debt burden (CEPR)
  3. Why it might be that you are hearing about hysteria over the deficit (CEPR)
  4. The Atlantic magazine has a comprehensive set of economic charts. Note that while the the first set of charts are about Europe, most of the others are about the US economy.
  5. More generally, the Center on Budget and Policy Priorities offers a very balanced assessment of relevant data. Some staring points:Three Charts on the Coming Budget Debate and some basic tax info and some more.

Other good general sources for economic information

For general political comment, including but not limited to the politics of the budget, I recommend

Posted in Econ & Money | 20 Comments

Shopper Boehner’s Mistake

House Speaker John Boehner acts like he’s a customer at the Obama Emporium of Budget Plans. Shopper Boehner doesn’t like the wares he offered. “Bring me a better one,” he commands. Strangely, this is more or less how negotiations between the Obama administration and the GOP used to work. Now, however, the Obama people have reverted to claiming they want actual negotiations, the sort that requires both sides to have an actual opening bid. “Bring me a better one” will not do. Shopper Boehner, and the House GOP in general are finding this shift hard to cope with.

The conventional wisdom is that House Speaker John Boehner is weak. He can’t deliver his caucus, and he doesn’t really understand the budget; he appears to believe, for example, that the Ryan Budget adds up. Because he doesn’t command the loyalty of his caucus, and because he has an ambitious lieutenant just aching to put the shiv between his ribs, Speaker Boehner can’t discipline his troops either. For these reasons, I recently called Boehner the Yasser Arafat of the Republican Party. It wasn’t meant as a compliment.

President Obama has made Speaker Boehner and the GOP an offer on the budget, one much like Obama’s previous budget plan, and so far Obama is actually sticking to it rather than ‘negotiating with himself’ as Obama has done for the last four years. Instead of offering concession after concession for the GOP to pocket and demand more, Obama has asked Boehner’s caucus to please spell out their own demands. This, of course, the GOP is unable to do for a number of reasons: politically, it would require them to own the pain caused by the radical cuts they claim to want; logistically it would require them to assemble a budget proposal that adds up (which would be a first in recent memory); logically, it requires either consistency with the budget they campaigned on — thus either causing extreme pain or not adding up — or it requires violating their recent campaign pledges. (Best line on that: “I’m old enough to remember when Republicans insisted that anyone who said they wanted to cut Medicare was a demagogue, because I’m more than three weeks old.“) Lurking in the background is the pledge that matters more than anything said to the voters on the campaign trail, the one to Grover Norquist.

Today’s paper quotes Speaker Boehner as saying this:

“We’ve put a serious offer on the table by putting revenues up there to try to get this question resolved,” Mr. Boehner said on “Fox News Sunday.” “But the White House has responded with virtually nothing. They have actually asked for more revenue than they’ve been asking for the whole entire time.”

In fact however there is no Republican “offer” on the table at all — nothing with numbers attached that could be turned in to legislation. Rather, Shopper Boehner’s idea of an “offer” is to say that were Obama to come up with something that actually closed a tax loophole, Boehner might accept it.

The Administration spent the weekend trying to explain this GOP tactic to pundits and to the people, but I’m not sure how good a job they did of it.

It may take a while for Shopper Boehner to grasp that the budget negotiation task requires Speaker Boehner. Right now I imagine Shopper Boehner thinks he is at the tailors. Someone brings out a suit. Shopper Boehner shakes his head, doesn’t even try it on, says he wants something nicer but he won’t pay much more for it. If you’re a customer and times are tough, maybe you can talk like that. If you are are a national leader trying to hammer out a budget while the economy is still on life support, not so much. You have to make a counter-proposal, and it actually has to have some substance. Even so, given the past four years, it is understandable why Shopper Boehner might think that if he continues being imperious then that nice tailor fellow will be right back out with fabrics drawn from the private stash.

Underlining the kabuki nature of the whole budget ‘negotiation’ are three other aspects: (1) The GOP has no intention of resolving the debt ceiling on a long-term basis: that’s it’s best hostage and the more it can extort for it more often, the better; (2) both sides have boxed taken the Pentagon’s budget off the table even though that is where most cuts should be coming from; (3) political momentum suggests strongly that at least a partial deal will be easier after January 1. Come the new year, the Bush tax cuts expire on their own. At that point, if the GOP wants to pass Obama’s versions of ‘tax cuts for the 98%’ it will no longer, as a formalist matter, involve ‘raising’ taxes for the top 2% since those will have gone up by themselves. While this might not please the GOP’s paymasters, it will at least allow the Republicans to claim with a straight face that their Norquist purity remains.


PS. Can someone explain to me how it can be that the Obama tax bill originated in the Senate? Art. I, sec. 7 of the US Constitution says,

All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

Doesn’t that make the Senate tax bill invalid? Or is it that tax cuts are immune from the rule since they lower, not raise, revenue? Or is the plan to re-pass the no doubt amended version in the Senate after the House votes?

Posted in Econ & Money, Politics: US | 4 Comments

Shorter Ross Douthat

The payroll tax has proved to be an effective way to redistribute a small amount of money from the rich to the poor and therefore we should seize every opportunity to undermine it; if this makes Social Security less solvent, all the better! (Summarizing “Our Enemy, the Payroll Tax”))

Posted in Econ & Money | 2 Comments