Category Archives: Economics

CBO: Trump sabotage of ‘Obamacare’ would send premiums and the deficit skyward

The Trump administration is going to have to file a status report in House v. Price regarding its position on the continuation of cost-sharing subsidies to insurance companies under “Obamacare.”

On August 1, the D.C. Circuit Court of Appeals granted the motion for leave to intervene filed by several state attorneys general and the District of Columbia. As part of that order, the Court ordered “the case shall continue to be held in abeyance. Appellee, appellants, and intervenors are directed to file status reports at 90-day intervals.” A status report was due on or about August 22 after a continuation in May.

[T]his bizarre lawsuit could still blow up the ACA insurance markets:

A pending court case, House v. Price (née House v. Burwell — and so much turns on the name change), has given the administration a bomb it could use to blow up insurance markets across the country. At stake is the legality of the payments the federal government makes to insurance companies to help cover the medical expenses of low-income people.

If Obama’s appeal continues, then the payments continue. But if President Trump or Attorney General Jeff Sessions were to decide not to continue the appeal, that’s a game changer.

By moving to defuse House v. Price, the Trump administration could signal that it means to make the best of Obamacare. At the same time, however, the case may represent the last best chance to rip the statute up from the roots. Skittish insurers are watching closely to see what the administration will do. Time is short: Insurers will have to decide very soon whether they want to participate on Obamacare’s exchanges in 2018.

Without the subsidies, insurance markets could quickly unravel. Even more insurers could withdraw from the public marketplaces where more than 10 million Americans obtained coverage last year.

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Jared Bernstein: The whys of increasing inequality

I posted about this chart last week, Inequality in One Chart, and our “usual suspects” posted their utterly nonsensical defenses of faith based supply-side “trickle down” GOP economics in the comments.

Today, economist Jared Bernstein weighs in at the Washington Post, The whys of increasing inequality: A graphical portrait:

The graph below, based on the work of economists Gabriel Zucman, Thomas Piketty and Emmanuel Saez, has been receiving considerable attention since it appeared in the New York Times last week. It shows the rate of annual income growth for adults at each percentile in the income distribution — from those who have the lowest incomes to those who have the highest incomes — over two time periods: the mid-1940s to 1980, and 1980 to 2014. Over the first period, post-tax income growth was fastest at the bottom, about 2 percent per year for the “middle class” (the 40th to the 80th percentiles), and a little slower among the wealthy.

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The growth pattern over the second 34-year period looks very different: The richer you were, the faster you got ahead. Incomes grew less than 1 percent for the bottom 50 percent and less than 2 percent for the next 45 percent. They then took off for the richest Americans, with the growth rate for the richest adults ending up about six times that of those in the middle.

The chart is a clear, intuitive way to show the increase in income inequality over the past few decades, and an important reminder that growth for the rich cannot be expected to trickle down to everyone else.

But it doesn’t show why inequality has grown. What explains this portentous change, one that has had profound effects on our society, our living standards, and our politics?

In fact, there are many perps, each of which is captured in the “Inequality’s Causes” slide below. They do, however, share a theme: Many of the factors that enforced a more equitable distribution of growth in the earlier period have been eroded. Moreover, that erosion is neither an accident nor the benign outcome of natural economic evolution. It is often the result of policies that have reduced workers’ bargaining power and supported the upward redistribution of growth.

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Inequality in One Chart

David Leonhardt of the New York Times reports on the latest research from Thomas Piketty, Emmanuel Saez and Gabriel Zucman. Our Broken Economy, in One Simple Chart:

Many Americans can’t remember anything other than an economy with skyrocketing inequality, in which living standards for most Americans are stagnating and the rich are pulling away. It feels inevitable.

But it’s not.

A well-known team of inequality researchers — Thomas Piketty, Emmanuel Saez and Gabriel Zucman — has been getting some attention recently for a chart it produced. It shows the change in income between 1980 and 2014 for every point on the distribution, and it neatly summarizes the recent soaring of inequality.

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The line on the chart (which we have recreated as the red line above) resembles a classic hockey-stick graph. It’s mostly flat and close to zero, before spiking upward at the end. That spike shows that the very affluent, and only the very affluent, have received significant raises in recent decades.

This line captures the rise in inequality better than any other chart or simple summary that I’ve seen. So I went to the economists with a request: Could they produce versions of their chart for years before 1980, to capture the income trends following World War II. You are looking at the result here. [Interactive graphic – see the article.]

The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich.

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‘Trump TV’ parrots RT network with state propaganda

In December of last year, there was a concern that the the National Defense Authorization Act now allowed Voice of America access to U.S. audiences (previously banned by law). This was stoking fears that Donald Trump could wield a powerful new propaganda arm. From fake news to the Trump ministry of propaganda. Those particular fears have not (yet) come to fruition.

In January, POLITICO reported Pro-Trump TV Network Has Big-League Dreams:

The clunky, black Panasonic PS2 belonging to Right Side Broadcasting Network (RSBN), a year-old conservative media startup based in Alabama, made a habit of filming the teeming crowds at Trump rallies and developed a cult following in the process, with Trump supporters regularly holding up makeshift “I love RSBN” signs and seeking out the RSBN cameramen to wave.

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The RSBN operation, which now employs 14 full-time employees and three contractors, began in July 2015, when Seales, a stay-at-home father at the time, grew frustrated with the lack of raw Trump rally footage online. He hired a freelancer to film what became the network’s first Trump rally broadcast and posted it on YouTube. When the video quickly amassed a million views, Seales realized that there was a robust demand for pure Trump footage—a feed that wasn’t clipped or talked over by mainstream outlets . . . That was when, borrowing from a phrase he’s fond of using—“being on the right side of history”—Seales started Right Side Broadcasting Network, originally a livestream operation airing on YouTube. He later added two call-in talk shows to the network’s YouTube channel, one hosted by conservative commentator Wayne Dupree, the other hosted by televangelist Pastor Mark Burns, a Trump surrogate.

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At the same time, the openly pro-Trump RSBN—which bills itself as a “ragtag bunch of media outsiders” seeking to deliver news to the common man—has been quietly attempting to transform itself from a small live-stream operation into a major and diverse digital media outlet, just in time to cover the Trump White House.

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July jobs report exceeds expectations

The U.S. economy added 209,000 jobs in July, according to government data released Friday morning, surpassing economists’ expectations. U.S job growth surges in July, as U.S. fully regains jobs lost in recession:

The unemployment rate ticked down to 4.3 percent, compared with 4.4 percent in June, and wages rose by 2.5 percent from the year before to $26.36 in July.

“It was pretty solid across the board,” said Michael Feroli, chief U.S. economist at JP Morgan. “It suggests there is really no slowing in the momentum of the labor market.”

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President Trump greeted the report as evidence of his administration’s success, tweeting Friday morning, “Excellent Jobs Numbers just released – and I have only just begun.”

Remember when this carnival barker con man dismissed the official unemployment rate published by the Labor Department as “such a phony number,” “one of the biggest hoaxes in American modern politics” and “the biggest joke there is”? He variously described the real rate as 18, 19, 20, 21, 22, 24, 25, 28, 29, 30 and 35 percent. In August 2016, he told Time magazine that the “real unemployment rate is 42 percent.” Trump called the government’s job numbers ‘phony.’ What happens now that he’s in charge of them? The man is a shameless liar who frequently takes credit for things he has had nothing to do with. Trump says he created 600,000 jobs. Not true.

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States can intervene to prevent GOP subterfuge on ‘Obamacare’ cost sharing reduction subsidies

There is a status report due to the D.C. Circuit Court of Appeals later this month in the case of House v. Price (née House v. Burwell), a bizarre lawsuit that could still blow up the ACA insurance markets:

House v. Price offers a back door to undoing Obamacare’s exchanges.

To destabilize the ACA insurance markets, all the administration would have to do is dismiss its appeal and stop fighting the case. At that point, the district court’s injunction — its order to stop making the illegal cost-reimbursement payments —would spring into effect.

Faced with enormous financial losses, many insurers would flee the market. Recall that the Affordable Care Act would still require insurers to cut their low-income enrollees a break — it’s just that insurers wouldn’t get reimbursed. The only way to make the numbers work would be to jack up premiums on everyone. In that scenario, the Urban Institute estimates that premiums would rise, on average, by $1,040, and that hundreds of thousands of people would lose coverage.

On Tuesday, the court permitted a coalition of state attorneys general to intervene in the lawsuit to prevent this GOP subterfuge between president Trump and the Tea-Publican Congress to sabotage “Obamacare.” Court ruling could help keep Obamacare subsidies:

A federal appeals court issued a ruling Tuesday that could help preserve a key subsidy that benefits health insurers and millions of Americans under the Affordable Care Act. The ruling could make it more difficult for the White House to carry out recent threats by President Trump to cut off the payments, giving legal standing to a new set of the payments’ ­defenders.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that a coalition of 16 state attorneys general, all of whom want to preserve the subsidies, may intervene in the appeal of a lawsuit over the fate of cost-sharing subsidies — payments the government makes to insurers on behalf of about 7 million low-income Americans who receive breaks on their health plans’ deductibles and other out-of-pocket costs.

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