Sunday, November 30, 2014


Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.  ~~ Ronald Reagan

Michelle and I don't want anyone telling us who our family's doctor should be - and no one should decide that for you either. Under our proposals, if you like your doctor, you keep your doctor. If you like your current insurance, you keep that insurance. Period, end of story. ~~ Barak Obama

Saturday, November 29, 2014


How immigration killed the tax deal
How could a major tax deal brokered by the top Senate Democrat die so quickly at the hands of a Democratic president?
Immigration politics and Democratic infighting came together to doom the $400 billion deal even before it had made it into print. The brinksmanship threatens to disrupt the lives of millions of taxpayers who rely on the mishmash of expired provisions the plan was trying to revive.
The collapse highlights the fragile coalitions in Congress, where even leaders of opposition parties agreeing to a deal can’t bring it home. It also shows the newly found boldness of President Barack Obama in the aftermath of the midterm elections, where the looming takeover by Republicans has him tilting back toward the liberal base.

Interviews with the key players showed that the two tax-writing panels in the Senate and House had for weeks been making solid progress toward a final tax package that looked like it would include the breaks for low- and middle-income people sought by the president.

But the deal fell apart just as it seemed to be coming together.

The immigration executive order soured the GOP on the tax cuts for the working poor and middle class sought by Democrats. Republicans worried undocumented immigrants targeted by the order would begin claiming the credits in droves. They found a friend in Senate Majority Leader Harry Reid, who reluctantly agreed to drop his party’s demands to extend expiring parts of the earned income tax credit (EITC) and its companion, the child tax credit.

The decision infuriated Reid’s colleagues.

“Everyone felt that Reid had suddenly given the store to Republicans and not gotten much in return,” said a Democratic House aide.
The president, with liberal Democratic backing on the Hill, issued the veto threat and the plan imploded, making the tax deal the first major collateral damage of the White House’s immigration action. 

A new clash over retirement benefits has come to a head following President Obama’s decision to unilaterally protect up to 5 million illegal immigrants from deportation. 
The internecine fight comes at the lowest point of the Obama’s relationship with Reid and the Senate’s soon-to-be disempowered Democratic leadership. White House officials — from Obama on down — have been feuding with Reid’s brash chief of staff, David Krone, and The New York Times has reported that Obama took the extraordinary step of asking Reid to exclude Krone from White House meetings.
Until late last week, Senate Finance, Ways and Means and leadership met regularly and were making progress on the package of tax breaks known as tax extenders. The group of some 55-plus tax breaks have expired, and many lawmakers in both parties want to renew by the end of the year, amid warnings from the IRS that failing to act would disrupt the upcoming tax filing season. They include everything from a major business research credit to one for teachers to be reimbursed for buying supplies.
The White House now acknowledges that many of the illegal immigrants spared from deportation under Obama’s sweeping executive action will become eligible for Social Security and Medicare benefits once they reach retirement age.

Both sides wanted to go big and include more, throwing concerns about the budget deficit aside. Senate Finance Chairman Ron Wyden (D-Ore.) and the Democrats were entertaining the idea of more permanent business tax relief that Republican wanted, and Republicans had even offered to make the expansion of the earned income tax credit permanent, according to a senior Senate Democrat aide.

Senate Democrats had made the EITC, a wage supplement for the working poor, and the $1,000 child tax credit key priorities weeks ago. In October, Wyden huddled with Finance members to find out what concessions he should wrestle from Republicans as part of the talks. They agreed on the provisions.

But then the president announced his executive action on immigration late last week, and it all started to unravel.

“It is a bit of surprise,” said Michael Tanner, a senior fellow at the Cato Institute who focuses on entitlement programs. “For a long time, there was an argument made by the administration that [undocumented immigrants] would not be eligible for such benefits. It does seem to be a contradiction.”
Republicans took the Democrats’ tax credits off the table completely.

Republicans had been railing against undocumented immigrants claiming the child tax credit for years, and the immigration order raised the prospect that they would begin claiming the EITC as well. If they agreed to extend them now, it would look like they were voting to expand government benefits to illegal immigrants.

What’s more, the EITC was notorious among Republicans for fraud. It had one of the highest rates of improper payments of any federal program. How would they sell that to rank-and-file Republicans in the House?

Some Democrats worried that the only way Republicans would ever agree to the provisions is if they included tough new rules aimed at preventing illegal immigrants from claiming them. So they dropped the idea, figuring that was better than either risking a crackdown on immigrants trying to claim the breaks or not getting a deal at all.

“It’s a political reality for Republicans,” said a source familiar with the negotiations between Reid and House Ways and Means Chairman Dave Camp (R-Mich.). “Our two biggest priorities, EITC and CTC, got taken off the table with the immigration announcement.” The source added: “If the immigration announcement had been delayed, we probably could have gotten something done.”

Democratic leadership instead emphasized other concessions they had wrung from Republicans. They got a permanent extension of the American Opportunity Tax Credit, which helps millions of middle-class voters with the cost of college. They got a permanent extension of the state and local sales tax deduction, important to many blue states. They got an extension of a break for using public transit. And they got Republicans to agree to Senate Democrats’ plans to roll over the rest of the extender provisions for another two years.

But much of the rest of their caucus wasn’t buying it.
By last Friday, Democrats on the Hill not party to the new talks caught wind of the secret negotiations between Reid and Camp by outside sources. The rank-and-file Democrats were confused: This “came out of no where,” as one Senate Democratic aide said.

By the time The New York Times on Monday reported that the tax credits might be left out, the reality had set in that they’d been undercut.

Treasury Secretary Jack Lew quickly weighed in with an abrupt statement — warning that the administration wouldn’t accept a deal it saw as giving away too much to Republicans and their allies in the business community.

But news of the deal kept coming.

Rank-and-file Democrats on both side of the aisle were furious with Reid’s office. They, like the White House, hadn’t conceded that the tax credits were out of the question.

“It’s Obamacare all over again, ‘If you like your doctor, you can keep your doctor,” one House GOP leadership aide told the Washington Examiner. “Obama was very clear on this issue. He said no benefits. What the president says just isn’t credible. That couldn’t be any more obvious by now.”
What’s more, the concessions Reid had won raised eyebrows among some Democrats.

“The whole reason the state and local sales tax was in there was because of Harry Reid,” said a Democratic staffer who didn’t wish to be identified.

The provision allows Americans to write off what they pay in sales tax from their federal taxes. It’s particularly important to states that have no income tax and rely on sales tax — like Nevada, Reid’s home state.

Likewise, Democrats noted that the mass transit break was particularly important to Sen. Chuck Schumer (D-N.Y.).

The White House was also furious, the Democratic aide said: “It was pretty clear that the White House feels like Reid and Schumer were trying to lock in some provision’s they care very much about … agreeing to a deal that’s overall very poor for Democrat priorities.”

Wyden’s staff set to work preparing a batch of demands for Republicans to make the deal sweeter for Democrats.

And that’s when the White House swept in.

The White House had kept a distance from the negotiating table. Senate Finance Democrats were keeping the administration apprised of their talks.

By Tuesday afternoon, following more reports of the deal, White House staff contacted Wyden’s Senate Finance office to see if there was an agreement.

The staff told the White House there wasn’t — that they had never agreed to the Reid-Camp deal being reported in the media.

At the same time, Lew and Office of Management and Budget Director Shaun Donovan had begun calling Democratic lawmakers to urge them to oppose the plan.

They didn’t have to push very hard, with many agreeing it was a bad deal without the the earned income and child tax provisions.

“We should go back to the drawing board,” said Michigan Rep. Sander Levin, the top Democrat on the Ways and Means Committee. Those concerns were echoed in public by Sen. Sherrod Brown (D-Ohio), who sits on the tax-writing Finance Committee and Rep. Chris Van Hollen (D-Md.), the top Democrat on the Budget Committee.

A few hours after White House aides spoke with Senate Finance, Obama himself call Wyden to tell him he’d made a decision: He’d veto the deal.

Senate Finance Democratic tax aides spread the news to the caucus. They called a meeting at 5:15 p.m. on Tuesday, led by staff director Joshua Sheinkman, and were told: This is not a Democratic deal.
“Without saying it, he was inferring — the Reid folks were trying to cut their own deal and got too far out in far in front of things,” the aide said. “The [Democratic] committee staff were pretty pissed.”
They were also told the White House locked in enough Democratic support to sustain a veto.

The blowup brought negotiations to a standstill. Aides in both parties say they will take another run at cobbling together a deal after lawmakers’ Thanksgiving break, but neither side is optimistic.
Though quiet about the Social Security implications of the president’s latest executive action, the White House has long argued that comprehensive immigration reform would strengthen the long-term outlook of entitlement programs.
Both sides agree the most likely outcome is the one neither want: A simple one-year status quo extension of all the breaks.

Wednesday, November 26, 2014


Ginsburg has surgery for coronary blockage … I guess mother-in-law jokes are out of the question!

WASHINGTON (AP) -- Supreme Court Justice Ruth Bader Ginsburg has had surgery to place a stent in her right coronary artery.

Court spokeswoman Kathy Arberg says the 81-year-old Ginsburg had the procedure Wednesday morning after a coronary blockage was discovered.

Arberg says Ginsburg had some discomfort Tuesday night during routine exercise and was taken to the hospital.

The justice is expected to leave the hospital in the next 48 hours.

Ginsberg has been on the court since 1993.


Is this unbelievable or what?
The world's first virtual shopping center opened in Korea . All the products are just LCD screens that allow you to order the items by touching the screen. When you get to the counter, your items are already bagged and ready to go.

A cellphone you can bend as much as you like and it will still do everything a smart phone does.
Your personal computer ring can play music, check your email, give you alerts and even allows you to browse or chat with others.
This man is demonstrating the ability of his prosthetic eye, which has a camera installed in it.
No longer using the camping stove just for cooking, a new line of camping stoves use the heat energy to power up lights and charge your phones or anything else you can charge by USB cable.

This trash can follows you around and calculates where to stand to catch your thrown garbage!
This motion tracking table morphs its surface to mimic your movements, allowing you to control objects from the other side of the planet if you so choose. 
This windowed door turns opaque whenever you lock it.

This incredible app translates signs from video and in real time!

The new 'Google Fiber' has started deploying, and will offer users an Internet connection that is about 100 times faster than what they are currently using.

When did car panels start looking this advanced?
A stop sign using water to project the image
An example of the new E-Ink in action. An ink that stays flat on the page and can be printed but still moves on the printer page. 
All of the functions these items that we used 20 years ago... Are now done by a single smartphone.
New casts can be printed with a 3D printer, are lighter, more comfortable and just as strong.
Bionic hands are now so advanced they can perform even delicate and complex movements.

Tuesday, November 25, 2014


Chuck Schumer: Passing Obamacare in 2010 Was a Mistake … now what?

The Senate’s No. 3 Democrat says that his party misused its mandate.
The writing is on the wall …  Schumer speech illustrates the priorities of the man widely expected to succeed Harry Reid as Democratic leader. …
November 25, 2014 Sen. Chuck Schumer upbraided his own party Tuesday for pushing the Affordable Care Act through Congress in 2010.
While Schumer emphasized during a speech at the National Press Club that he supports the law and that its policies "are and will continue to be positive changes," he argued that the Democrats acted wrongly in using their new mandate after the 2008 election to focus on the issue rather than the economy at the height of a terrible recession.
"After passing the stimulus, Democrats should have continued to propose middle-class-oriented programs and built on the partial success of the stimulus, but unfortunately Democrats blew the opportunity the American people gave them," Schumer said. "We took their mandate and put all of our focus on the wrong problem—health care reform."
The third-ranking Senate Democrat noted that just about 5 percent of registered voters in the United States lacked health insurance before the implementation of the law, arguing that to focus on a problem affecting such "a small percentage of the electoral made no political sense."
The larger problem, affecting most Americans, he said, was a poor economy resulting from the recession. "When Democrats focused on health care, the average middle-class person thought, 'The Democrats aren't paying enough attention to me,' " Schumer said.
The health care law should have come later, Schumer argued, after Democrats had passed legislation to help the middle class weather the recession. Had Democrats pushed economic legislation, he said, "the middle class would have been more receptive to the idea that President Obama wanted to help them" and, in turn, they would have been more receptive to the health care law.
Schumer said he told fellow Democrats in the lead-up to the passage of the Affordable Care Act that it was the wrong time to pass the law.

"People thought—and I understand this—lots of people thought this was the only time to do this, it's very important to do. And we should have done it. We just shouldn't have done it first," he said. "We were in the middle of a recession. People were hurting and saying, 'What about me? I'm losing my job. It's not health care that bothers me. What about me?' … About 85 percent of all Americans were fine with their health care in 2009, mainly because it was paid for by either the government or their employer, private sector. So they weren't clamoring. The average middle-class voter, they weren't opposed to doing health care when it started out, but it wasn't at the top of the agenda."

Schumer blamed the push for the Affordable Care Act so early in Obama's first term for the rise of the tea-party movement, which destroyed the Democratic majority in the House in 2010 and went on to—long with a number of other missteps by the federal government, including implementation of the law—oust the Democratic majority in the Senate as well in 2014.

Sunday, November 23, 2014


Up to 30,000 missing emails sent by former Internal Revenue Service official Lois Lerner have been recovered by the IRS inspector general, five months after they were deemed lost forever.

The U.S. Treasury Inspector General for Tax Administration (TIGTA) informed congressional staffers from several committees on Friday that the emails were found among hundreds of “disaster recovery tapes” that were used to back up the IRS email system.

“They just said it took them several weeks and some forensic effort to get these emails off these tapes,” a congressional aide told the Washington Examiner.

The IRS, in a statement provided to the Examiner, said the agency and IRS Commissioner John Koskinen is fully cooperating with the investigation.

"As Commissioner Koskinen has stated, the IRS welcomes TIGTA’s independent review and expert forensic analysis." The IRS statement said. "Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found."

RELATED: Tea Party lawyer hails GOP election victories as boon to IRS scandal probe

Committees in the House and Senate are seeking the emails, which they believe could show Lerner was working in concert with Obama administration officials to target conservative and Tea Party groups seeking tax-exempt status before the 2012 presidential election.

The missing emails extend from 2009 to 2011, a period when Lerner headed the IRS’s exempt-organizations division. The emails were lost when Lerner’s computer crashed, IRS officials said earlier this year.

In June Koskinen told Congress the emails were probably lost for good because the disaster recovery tape holds onto the data for only six months. He said even if the IRS had sought the emails within the six-month period, it would have been a complicated and difficult process to produce them from the tapes.

RELATED: McConnell: Bet on more IRS hearings

The IRS also lost the emails of several other employees who worked under Lerner during that period.

Lerner, who retired from the IRS, has refused to be questioned by Congress.

She provided a statement at a March hearing, but then clammed up, following the advice of her lawyer to avoid self-incrimination.

The House, led by Republicans, voted in May to hold Lerner in contempt of Congress.

RELATED: Lois Lerner: 'I didn't do anything wrong'

Congressional aides said officials from the inspector general’s office said it could take weeks to get the recovered emails off the tape before sending them to lawmakers in Capitol Hill.

In all, investigators from the inspector general’s office combed through 744 disaster recovery tapes. They are not finished looking.

There are 250 million emails ion the tapes that will be reviewed. Officials said it is likely they will find missing emails from other IRS officials who worked under Lerner and who said they suffered computer crashes.

RELATED: Republicans pile on criticism of Lerner, Democrats remain silent

Investigators said the emails could include some overlapping information because it is not clear how many of them are duplicates or were already produced by Lerner to the congressional committees.

Rep. Darrell Issa, R-Calif., said the House Oversight and Government Reform Committee he chairs will be one of the committees that will examine the emails.

“Though it is unclear whether TIGTA has found all of the missing Lois Lerner e-mails, there may be significant information in this discovery,” Issa told the Examiner. “The Oversight Committee will be looking for information about her mindset and who she was communicating with outside the IRS during a critical period of time when the IRS was targeting conservative groups. This discovery also underscores the lack of cooperation Congress has received from the IRS. The agency first failed to disclose the loss to Congress and then tried to declare Lerner’s e-mails gone and lost forever. Once again it appears the IRS hasn’t been straight with Congress and the American people.”

RELATED: Budget cuts may have spared key IRS emails


Effects of the Affordable Care Act on Economic Productivity
CASEY MULLIGAN, a professor of economics at the University of Chicago, received his Ph.D. in economics from the University of Chicago in 1993. He has been a visiting professor at Harvard University and Clemson University, and is affiliated with the National Bureau of Economic Research, the George J. Stigler Center for the Study of the Economy and the State, and the Population Research Center. He has written for the Chicago Tribune, the Chicago Sun-Times, the New York Times, and the Wall Street Journal, and is the author of three books, including Side Effects: The Economic Consequences of the Health Reform.

Here are the 10,535 pages of affordable healthcare act condensed to 4 sentences...As humorous as this sounds.....every last word of it is absolutely TRUE!1. In order to insure the uninsured, we first have to uninsure the insured.2. Next, we require the newly uninsured to be re-insured.3. To re-insure the newly uninsured, they are required to pay extra charges to be re-insured.4. The extra charges are required so that the original insured, who became uninsured, and then became re-insured, can pay enough extra so that the original uninsured can be insured, which will be free of charge to them.
The topic of my talk today is the economic side effects of the Affordable Care Act (ACA), sometimes referred to as Obamacare. Since most of the economy has to do with labor and work, that’s where I’ll start. But, first a caveat. I’m an economist, and I’m going to talk about some parts of this complex law that have an impact on the labor market. Other parts of it relate to health and medicine, and because I’m not a doctor or a biologist, I’m not going to speak to those parts. From an economic or labor-market perspective, I’m going to explain how the costs of the ACA outweigh its benefits. But I can’t measure or estimate its effects on health care. I leave that to others.

The key economic concept required to understand the labor market effects of the ACA is what economists call “tax distortions.” Tax distortions are changes in behavior on the part of businesses or households for the purpose of reducing their taxes or increasing their subsidies. We call them distortions because they don’t occur for real business or real personal reasons. They occur because of the tax code. A prime example of a tax policy that creates distortions is the ethanol subsidy—technically it is a credit, not a subsidy—whereby gasoline refiners are subsidized on the basis of how many gallons of gas they produce with ethanol. Because of this subsidy, businesses change the type of gas they produce and deliver, people change the type of gas they use—which affects engines—and corn is used for ethanol instead of as feed or food. Nor do the distortions stop there. Arguably, food prices are increased due to the reallocation of corn to different uses—and when food prices are higher, restaurants and households do things differently. There are distortions economy-wide, all for the chasing of a subsidy.

To be clear, just because taxes cause distortions doesn’t mean that we should never have taxes. It just means that in order to get the full picture when it comes to policies like an ethanol subsidy or laws such as the ACA, we need to take into account the tax distortions in order to ensure that the benefits we are seeking exceed the costs.

The Employer Mandate/Penalty/Tax

So what are the tax distortions that emanate from the ACA? Here let me simply focus on two aspects of the law: the employer mandate or employer penalty—the requirement that employers of a certain size either provide health insurance for full-time employees or pay a penalty for not doing so; and the exchanges—sometimes they’re called marketplaces—where people can purchase health insurance separate from their employer. The mandate or penalty is intended, of course, to encourage employers to provide health insurance. And the exchanges are where the major government assistance is provided, since those who purchase insurance in an exchange typically receive a tax credit. As I’ll explain, taken together, the penalty on employers and the subsidies in the exchanges add up to a tax on full-time employment—a tax that you pay if you work full time but not if you work part time or don’t work at all. And the problem with that, of course, is that by taxing full-time work—which is the same as subsidizing part-time work and unemployment—you get less of the former and more of the latter two.

How does this full-time employment tax work with regard to the employer mandate? As I mentioned, the penalty applies only in the case of full-time employees and only to employers that don’t offer health coverage, and it applies only in those months during which those full-time employees are on the payroll. If an employee cuts back to part-time work, the employer no longer has to pay the penalty. The dollar amount of the penalty doesn’t depend on whether the employee is rich, poor, or middle class—if he works full time, the employer must either provide insurance or pay the penalty. And the penalty is indexed to health insurance costs, so every year those costs increase more than the economy and more than wages, the penalty will increase more than the economy and more than wages.

The current penalty is usually described as $2,000 per year per full-time employee. But it’s really more than that, because the penalty, unlike wages, is not deductible from business taxes. So in terms of a salary equivalent, the penalty is closer to $3,000 a head. Needless to say, this penalty reduces competition in the labor market: It discourages employers from competing for full-time employees—which, if you’re an employee, is a bad deal. Also there are a lot of employers who are not going to pay the penalty because they don’t meet the size threshold of 50 or more employees, and employees are going to suffer because these small employers won’t want to become large employers and therefore subject to the penalty.

Furthermore, this mandate or penalty—and by this time it should be clear that we can think of it as a tax on having a full-time employee—disproportionately harms low-skill workers. Think about it this way: How many hours does a worker have to work each week to produce the $3,000-per-year of value to justify keeping his job or being hired? For a minimum-wage worker, that comes to eight hours a week, all year round—one day of work a week for the government due to the ACA alone. Higher-skilled employees can obviously produce $3,000 worth of value in less time, so the penalty will have less of an impact on them.

Subsidized Health Insurance Exchanges

What of the tax distortions that come from the subsidized health insurance exchanges or marketplaces? To begin to think about this, imagine paying full price for your health care. How does full price work? Well, you pay the full price. The health care provider doesn’t look at your tax return and adjust the bill accordingly. So we would never call paying full price for health care an income tax of any kind. Or imagine there is a discount on the full price—for instance, 30 percent off for everybody, regardless of income. In that case it’s still not an income tax. No matter how much you earn, you pay the same price. But what if the discount (or subsidy) is tied to your employment situation? Not to your income, but to your employment situation. That’s how the exchanges work. If you have a full-time job with an employer that offers coverage—which is the case for most employees in our economy—you don’t get the subsidy offered through the exchanges. If you want to get the subsidy, you need to become a part-time worker or spend time off the job. In other words, this discount, too, is a tax on full-time employment. Of course, no politician ever calls it a tax. But when you are in a group of people that doesn’t receive a subsidy that people in another group receive, that’s a tax.

So far I have oversimplified things, because there isn’t just one subsidy for everybody in the exchanges. The subsidy depends on your income. So there’s also an income tax built in. The more you earn, the less of a discount you get. Indeed, if you earn enough, the discount disappears. The folks analyzing this law in Washington made the mistake of focusing only on the income-tax aspect of the subsidy. There will be only eight million people in the exchanges, they figured, so eight million people now have a new income tax. That’s no big deal, they thought. They were oblivious to the fact that they were implementing a full-time employment tax on the majority of American workers. In all of the economic analyses of the ACA, there was no mention of this full-time employment tax—despite the fact that it’s the single biggest tax in the law.

In describing the size of this tax, again I find it useful to think in terms of how many hours per week somebody has to work to create enough value to replace the government subsidy he is losing because of his full-time status. There are a number of full-time workers who may have to work ten, 20, or even 30 hours a week to create the value they would get for free if they worked part time or didn’t work under the ACA. In the old days, working part time meant you earned less, and your family had less to spend than if you worked full time. Under this new system, on the other hand, if you have a family of four and make $26 an hour, dropping to part time can actually improve your financial condition by qualifying you for well over $1,000 per month in subsidies through the health care exchanges—an amount that exceeds what you would make by working the extra eleven hours per week. This is an economically perverse situation.
We have decades of research showing that when you tax something, you get less of it. So if you tax labor, you get less labor. By that I mean on average—I don’t mean that every worker responds to every labor tax. That’s obviously not the case. But on average, if you tax labor you get less labor. As a result of the ACA, then, we are going to have fewer people working and less value created overall.
Nor will the loss of productivity end there. As with the ethanol example, there will be more and more tax distortions from the ACA as it continues to roll out. Businesses will change the way they do business, whether it’s by bending over backwards to stay below 50 employees or by having more part-time employees and fewer full-time employees—not because these policies create value or satisfy customers, but because they avoid penalties or enhance subsidies. The Chicago Cubs baseball team changed over to more part-time employees this past summer, and as a result there was a day when the grounds crew couldn’t handle the weather—reducing the value of the game for the fans in general. Incentives and disincentives in the tax code ripple through the economy in unimaginable ways.

This has not been well understood. Some analysts, for instance, have argued that not many employers, relatively speaking, are going to end up paying the penalty, so the harm of the penalty will be limited. And that’s just wrong. Adam Smith pointed out in The Wealth of Nations that if there’s a type of employment that’s evidently either more advantageous or less advantageous than other types of employment, so many people would crowd into it in the former case, or desert it in the latter case, that its advantages would soon return to the level of the other types. In terms of the ACA, whereas only some workers will experience the penalty directly, it will be felt across the economy because workers will move out of the penalized businesses—and customers will do the same, since those penalties are passed on to them in the form of higher costs. We’ll all experience it. Economists and politicians who looked at this law made the mistake of basing their analyses on models in which nothing matters except what happens directly to the individual worker and his employer. That is not how economics works.


In summary, the ACA has three major taxes in it. Two are taxes on full-time employment and the other is a tax on income. They may be implicit, they may be hidden, politicians may not call them taxes, but that’s what they are. Their economic impact on workers varies widely, affecting low-skill workers the most. They create all kinds of productivity problems and will have visible and permanent effects on the economy. I have estimated that employment will be three percent less over the long term because of the ACA, and that national income—or GDP, if you like to think of it that way—will be two percent less. If you look at the productivity costs alone—forgetting the fact that there will be a number of people not working anymore—they come to $6,000 per person who gets health insurance because of the law. And I’m not beginning to count the payments needed for health care providers.

In conclusion, I can make you this promise: If you like your weak economy, you can keep your weak economy.

Saturday, November 22, 2014


WASHINGTON — The most serious challenge to President Obama's health care law since it survived the Supreme Court by a single vote in 2012 isn't a balky website, public opinion or the Republican takeover of Congress. It's the Supreme Court — again.

In a case likely to be heard in March and decided in June, the justices will dissect the meaning of four words on page 95 of the 906-page Patient Protection and Affordable Care Act — four words that could render health insurance premiums unaffordable for millions of Americans.

Here's a look at the issues in King v. Burwell:

Question: Why the fuss over four words?

Answer: The law states that tax credits will be available through so-called exchanges, or online marketplaces, "established by the State." When it was being crafted, it was assumed that all 50 states would create their own exchanges. After it passed in March 2010, it became clear that many states would rely on the federal government to operate them, as the law allows.

In 2012, the Internal Revenue Service made the subsidies available in all states. The law's challengers claim they cannot be offered in exchanges operated by the federal government. Thirty-six states fit into that category. Without subsidies, insurance costs would skyrocket.

Q: What's more important — the plain meaning of those words, or the context?
A: That depends on whom you ask. The challengers say the plain meaning is clear: Subsidies can be offered only in state exchanges. If that's what Congress wrote, they say, the Supreme Court cannot change it, and the IRS cannot extend tax credits to federal exchange customers.

The administration and other proponents say the words must be read in the context of a law clearly intended to make health insurance more widely available and affordable. Even the suspect words appear in a subtitle of the law that reads, "Affordable Coverage Choices for All Americans."

Q: Do the challengers have other arguments?

A: To back up their claim that Congress meant what it said — that it wasn't simply a drafting error — the law's opponents say lawmakers purposely made tax credits available only in state-run exchanges as an incentive for governors and legislatures to create their own exchanges. Otherwise, the argument goes, their residents would get cheated out of a major benefit.

Q: Do proponents have other arguments?

A: They emphasize how statutes customarily are interpreted by courts. When a law's text would lead to an absurd result, they say, it requires reinterpretation. When it's ambiguous, they say, courts should defer to administrative agencies' interpretations — a canon known as "Chevron deference" after a 1984 case involving the energy corporation.

Q: What has happened in the courts until now?

A: The Supreme Court upheld Obamacare in 2012 by a 5-4 vote in an opinion written by Chief Justice John Roberts. Last year, it exempted closely held companies with religious objections from a follow-up regulation that insurance plans must include full coverage for contraceptives.

The argument over subsidies in federal exchanges is the focus of four separate cases. In King, the U.S. Court of Appeals for the 4th Circuit in Richmond unanimously upheld the law. A panel of the D.C. Circuit appeals court ruled 2-1 for the challengers, but that opinion was vacated by the full court pending further review, which is on hold. A district court in Oklahoma ruled in favor of the challengers. A fourth case is pending in Indiana.

Q: Why is the Supreme Court jumping in now?

A: Technically, there is no split among appellate courts, which usually prompts the high court's intervention. The court occasionally takes on cases of major national importance before such a split develops, although last month, it refused to do that in the case of same-sex marriage.

One reason probably has to do with the time clock. In their brief, the challengers argue that the longer the law is in effect, the greater the risk for people who receive subsidies that could be "clawed back."

Another reason could be purely ideological. Proponents contend that the four conservative justices who opposed the law from the start probably were the ones voting to hear the case.

Q: What happens if the challengers win?

A: A chain reaction, beginning with the impact on premiums. More than 7 million people could lose subsidies in 2016, according to the non-partisan Urban Institute. On average, the subsidies pay more than 75% of premium costs, or about $4,700 per year.

Without subsidies, more than 8 million people would be exempt from the requirement that individuals purchase insurance, because it no longer would be affordable. Hundreds of thousands of employers would be exempt from penalties for not covering employees, because their workers would not be subsidized in states with federally operated exchanges.

Q: Would that kill the law?
A: Not necessarily. First of all, individuals in 14 states that operate their own exchanges would still be eligible for tax credits. Additional states, such as those with Democratic governors or with Republican governors who have accepted increased Medicaid funding — another of the law's carrots — might set up exchanges.

Other sections of Obamacare would remain intact, at least initially. Those include a guarantee that insurance companies cover everyone, the Medicaid expansion, Medicare cost containment measures and allowing young people under 26 to remain on their parents' policies.

Q: What's likely to happen?
A: The law probably has at least four votes on the court — those of Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan. Whether the four justices who dissented in 2012 — Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito — buy the challengers' plain-text argument is unclear. But it takes four votes in private conference to hear the case, and they are the most likely antagonists.

That could leave Roberts where he found himself two years ago — on the spot. Because the court historically is known by its chief justice, he knows the "Roberts Court" — entering its 10th year — will be remembered at least in part for its battles with Obama over his most cherished domestic policy achievement.


FACT CHECK: Obama's claims on illegal immigration

WASHINGTON (AP) — President Barack Obama made some notable omissions in his remarks about the unilateral actions he's taking on immigration.

A look at his statements Thursday and how they compare with the facts:

OBAMA: "It does not grant citizenship, or the right to stay here permanently, or offer the same benefits that citizens receive. Only Congress can do that. All we're saying is we're not going to deport you."

THE FACTS: He's saying, and doing, more than that. The changes also will make those covered eligible for work permits, allowing them to be employed in the country legally and compete with citizens and legal residents for better paying jobs.

OBAMA: "Although this summer, there was a brief spike in unaccompanied children being apprehended at our border, the number of such children is now actually lower than it's been in nearly two years."

THE FACTS: The numbers certainly surged this year, but it was more than a "brief spike." The number of unaccompanied children apprehended at the border has been on the rise since the 2011 budget year. That year about 16,000 children were found crossing the border alone. In 2012, the Border Patrol reported more than 24,000 children, followed by more than 38,800 in 2013. In the past budget year, more than 68,361 children were apprehended.
OBAMA: "Overall, the number of people trying to cross our border illegally is at its lowest level since the 1970s. Those are the facts."

THE FACTS: Indeed, in the 2014 budget year ending Sept. 30 the Border Patrol made 486,651 arrests of border crossers, among the fewest since the early 1970s. But border arrests have been on the rise since 2011.

The decline in crossings is not purely, or perhaps even primarily, due to the Obama administration. The deep economic recession early in his presidency and the shaky aftermath made the U.S. a less attractive place to come for work. The increase in arrests since 2011 also can be traced in part to the economy — as the recovery improved, more people came in search of opportunity.

OBAMA: "When I took office, I committed to fixing this broken immigration system. And I began by doing what I could to secure our borders."

THE FACTS: He overlooked the fact that he promised as a candidate for president in 2008 to have an immigration bill during his first year in office and move forward on it quickly. He never kept that promise to the Latino community.

Cuban migrants head off from Caymans, bound for Honduras

GEORGE TOWN Cayman Islands (Reuters) - A group of 15 Cuban migrants waved to onlookers as they set sail from Grand Cayman aboard a 14-foot homemade boat on Friday after a brief overnight stop, hoping to make the risky 400-mile journey across the Caribbean to the north coast of Honduras.
The boat, made from metal and fiberglass with inner tubes attached to wooden outriggers, was carrying five woman and 10 men and set off last week from Manzanillo, in eastern Cuba. Three other passengers abandoned the journey and turned themselves over to Cayman authorities for repatriation to Cuba.

Cubans seeking to flee the communist-run island are heading in increasing numbers by sea to Central America and then making a long journey overland to reach the United States.

One group of 32 Cuban migrants drifted for three weeks without food or water this summer after their engine failed. Only 15 were found alive when they were rescued by Mexican fishermen.

U.S. officials say more than 16,000 Cubans arrived without visas at the border with Mexico in the past year, the highest number in a decade.

Cuban officials have not commented on the illegal boat departures, but blame the U.S. policy for encouraging migrants to risk their lives.

Under Washington's "wet foot, dry foot policy," Cuban migrants who make it onto U.S. soil are allowed to remain, while those intercepted at sea are turned back.

One man, who identified himself as Ediberto, said he worked in a hospital, but undertook the dangerous journey because of poor economic conditions in Cuba.

"There is food available, but you have to have money to pay for it," he said.

Another passenger, Manuel, a farmer from Ciego de Avila, said there is dissatisfaction in the countryside, but people are afraid of Cuba's communist government.

U.S. Coast Guard patrols have made it hard to reach the United States undetected via the Florida Strait, which separates Cuba and Florida by only 90 miles at its narrowest point.

Many Cubans now opt for the longer western route to Honduras, a trip of about 675 miles, via the Cayman Islands, which takes about 10 days.

Honduran authorities give Cuban migrants temporary visas allowing them to head north for the United States.

Wednesday, November 19, 2014



LOS ANGELES (AP) -- The largest solar power plant of its type in the world - once promoted as a turning point in green energy - isn't producing as much energy as planned.

One of the reasons is as basic as it gets: The sun isn't shining as much as expected.
Sprawling across roughly 5 square miles of federal desert near the California-Nevada border, the Ivanpah Solar Electric Generating System opened in February, with operators saying it would produce enough electricity to power a city of 140,000 homes.

So far, however, the plant is producing about half of its expected annual output for 2014, according to calculations by the California Energy Commission.

It had been projected to produce its full capacity for 8 hours a day, on average.


"Factors such as clouds, jet contrails and weather have had a greater impact on the plant than the owners anticipated," the agency said in a statement.

It could take until 2018 for the plant backed by $1.6 billion in federal loan guarantees to hit its annual peak target, said NRG Energy Inc., which operates the plant and co-owns it with Google Inc. and BrightSource Energy.

"During startup we have experienced ... equipment challenges, typical with any new technology, combined with irregular weather patterns," NRG spokesman Jeff Holland said in a statement. "We are confident that Ivanpah's long-term generation projections will meet expectations."

The technology used at Ivanpah is different than the familiar photovoltaic panels commonly used for rooftop solar installations. The plant's solar-thermal system - sometimes called concentrated-solar thermal - relies on nearly 350,000 computer-controlled mirrors at the site, each the size of a garage door.

The mirrors reflect sunlight to boilers atop 459-foot towers - each taller than the Statue of Liberty. The resulting steam drives turbines to create electricity.

When the $2.2 billion complex opened, Energy Department Secretary Ernest Moniz called it a "symbol of the exciting progress" in renewable energy.

While the agency still says the project remains in good standing, Kaitlin Meese, an analyst at research firm Bentek Energy, said its early production figures "do not paint a strong picture for solar-thermal technology development."  

The operation of such plants is highly dependent on weather conditions, and predicting when and how strongly the sun will shine is not a perfect science.

A little bit of inefficiency with mirrors can translate into a loss of power output ranging from small to significant, said Dr. Neil Fromer, executive director of the Resnick Sustainability Institute at the California Institute of Technology.

Problems could include getting the thousands of mirrors pointed in precisely the right direction, especially in the cool early morning, or keeping them clean in the dusty Mojave Desert.

Operators initially expected to need steam from gas-powered boilers for an hour a day during startup. After operations began, they found they needed to keep boilers running more than four times longer - an average of 4 1/2 hours a day.

State energy regulators in August approved the plant's request to increase the natural gas it is allowed to burn by 60 percent.

Additional natural gas could also be needed to operate boilers when clouds thicken or to maintain output at the end of the day and extend the capability for power production, the company said.

"Because the plant requires sunlight to heat water and turn it to steam, anything that reduces the sunlight will affect steam conditions, which could damage equipment and potentially cause unsafe conditions," said the commission, which approved the request for increased gas use.

Fromer said it was surprising that so much additional gas is needed, adding that it "signals to me they have some very large problems that they are going to need to sort out."

Plants owners said they are learning on the fly to some extent.

"For some aspects of operation, the only way to fully understand how the systems work has been through the experience of operating," plant owners wrote in the request to increase gas use.

Holland said the company always expected a ramp-up period of four years to reach maximum output. That extended period was not publicly disclosed, however. Holland said it is outlined in confidential agreements with two California utilities buying the power, Southern California Edison and Pacific Gas and Electric Co.

Brightsource said on its website that the weather has generally been substantially worse than historical averages - in other words, cloudy - resulting in reduced output in certain months.  

"We remain confident that over time the sun at Ivanpah will be more than sufficient for the plant to meet its expected performance targets," the statement said.



The recent midterm election could be read as the belly-flop conclusion of the Obama era: What was thought to be a transformative period in American politics—a brief spark of minority- and youth-driven enthusiasm that created the promise of a post-racial America—did not, it appears, carry through to 2014.

But that interpretation would not be entirely correct. The energy that propelled Obama to the presidency lingers in at least one important respect: An increasingly muscular minority political base is here to stay. And that’s just the beginning.

For someone like me who has dedicated to my life to studying changing demographics, there’s no bigger event than the once-a-decade census. And it’s clear that the biggest story to come out of the 2010 census actually happened the following year: In 2011, more minority babies were born in the United States than white babies. Since 2000, the nation’s population of young whites has been on the decline. All of the growth in the nation’s under-18 population has been attributable to new minorities—namely Hispanics, Asians and multiracial Americans. Just as the Baby Boom upended the second half of the 20th century, the ascendancy of racial minorities will be the signature demographic trend of the 21st. And the coming explosion will have radical implications for American politics.

Demagogues of the past once fanned fears of a “minority white” nation, but it’s clear that politicians entering the 2016 landscape will have to contend with—and celebrate—an electorate that looks more different than it looks the same. It’s a shift that will upend many of the politics and alliances we’ve come to expect.

So just how different will America look in the years to come? And who will be voting in 2016, 2018, and 2020?

As the white population continues to age, racial minorities will pick up the slack. Already, 10 states have “minority white” child populations, including reliably red states like Texas and Arizona.

By 2027, minorities will out-number whites nationally among those under age 30; ditto by 2033 for those under age 40. As the older population continues to stay much whiter than the millennial generation and its successors, current political divisions between older, whiter generations and younger, more diverse ones—something I call the cultural generation gap—will linger. In one example of this divide, a 2011 Pew Research Center survey found that seven in 10 millennial minorities favored a larger government with more services over a smaller government with fewer. The same was true of only four in 10 white baby boomers.

The spread of racial minorities—both old and new groups—to virtually all parts of the country will also play a key role in this century’s demographic transformation and its political impact. New minorities, led by Hispanics, are dispersing inward from coastal urban centers like Los Angeles and New York and impacting parts of the interior that have been largely white (and Republican-leaning) like Nevada or white and black (with racially disparate politics) like Georgia.
Sun Belt states in the South and interior West, for instance, contain many of the 145 rapidly growing new Hispanic destinations that I have identified—leading to a possible shift in their politics.
Another especially noteworthy trend for the South is a continued shift of the nation’s largest old minority, blacks, to that region—a reversal of the decades-long migration from the South to northern cities. This reverse migration, which began in earnest in the 1990s, continues to shape the resident and voter profiles of rapidly growing southern states like Georgia and North Carolina.

Georgia is a case in point. Between the 2004 and 2014 elections, more than four-fifths of the state’s new eligible voters were minorities, with blacks alone accounting for one-half of the gain. This shift had much to do with Democratic senatorial candidate Michelle Nunn’s competitive showing in this year’s strong Republican wave election, and bodes well for making Georgia a player in future presidential elections.
The dispersal of racial minorities is also impacting the suburbs and, increasingly, the suburban vote. While whites have long stuck primarily to the suburbs, more than half of all Asians, Hispanics and blacks now live among the crabgrass and cul-de-sacs born out of post-World War II white flight.
Minorities—Hispanics especially—are the dominant source of suburban population growth, comprising more than one-third of all suburbanites in large American metropolitan areas—up from 19 percent in 1990. Because these new suburban minorities are as a whole younger than the white population they’re replacing, this shift should reinvigorate support for improved access to better schools, housing affordability and social services among suburban voters.

Of course, translating this minority-driven demographic change into political change involves some lag time. Only about half of Hispanics or Asians in the United States are eligible to vote, because they are either too young or are not citizens, and on top of that, minority voter turnout is lower than for the population as a whole.

But even with these handicaps, minority voters are already remaking the electoral map in many parts of the country particularly in the southeast and mountain west Sun Belt states like North Carolina and Nevada, where until very recently, Republicans held a virtual choke-hold on presidential elections.

This can be seen by looking at the spots of blue that have bloomed on the partisan map in the past two elections. In 2004, George W. Bush made a near clean sweep of the South and Rocky Mountain West, continuing a broad pattern followed by victorious Republican candidates since Richard Nixon. But in both 2008 and 2012, Democrat Obama reached into Republican territory to take five new South and West states—mostly due to minority votes. While enthusiastic minority turnout for the first nonwhite presidential candidate was important, so was the Sun Belt’s changing—and increasingly left-leaning—demography.

It should not go unnoticed that the lion’s share of Obama’s Electoral College votes came from traditional Democratic states on the coasts and in the industrial Midwest. And in these states, too, minorities were largely responsible for his wins. In most of the Midwestern states Obama won, like Ohio, Pennsylvania and Wisconsin, minority populations were still fairly small, but the strong turnout and Democratic vote of minorities bested the tepid Republican support from a far larger white population.

And there, in fact, lies the rub for Democrats in the short run. As the Baby-Boom cohort takes over the older senior population, it will still remain a substantial Republican force over the next several election cycles.

So if current racial party and candidate preferences persist, heavy turnout among minorities will be necessary for the Democrats to perform well—both nationally and especially in the North, with its substantial older white population. The lack of such enthusiasm proved to be a gaping Democratic vulnerability in the midterms.

But in the longer run, demography seems inevitably tilted in favor of racial minorities, whose ranks are swelling throughout the country and who have the potential to disrupt the nation’s current political fault lines. And that’s not to say that Democrats will necessarily be the prime beneficent of this demographic shift, either, despite the conventional wisdom. In Texas, for instance, 22 percent of the population in the state’s deep-red, metropolitan suburbs are Hispanic—which could be why GOP presidential candidate Mitt Romney took 36-37 percent of Hispanic vote in that state with 27 percent in other states. One of the most pressing questions for candidates and strategists on both sides in 2016 will be how to leverage this groundswell to their advantage. Because if they can’t adapt now, politicos might soon be looking at another challenge: How to keep the coming wave from relegating their party to the sidelines, no more than a relic of majority-white America.

William H. Frey is a demographer and senior fellow with the Metropolitan Policy Program at the Brookings Institution and author of Diversity Explosion: How New Racial Demographics are Remaking America.