So Sorry, We Gave All the Money to the Rich People

This is amazing:

President Donald Trump told lawmakers on Thursday he wants to scrap a pay raise for civilian federal workers, saying the nation’s budget couldn’t support it.

In a letter to House and Senate leaders, Trump described the pay increase as “inappropriate.”

“We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases,” the President wrote.

An across-the-board 2.1% pay increase for federal workers was slated to take effect in January. In addition, a yearly adjustment of paychecks based on the region of the country where a worker is posted — the “locality pay increase” — was due to take effect.

Trump said both increases should no longer happen.

Hey- they did it to themselves:

That’s a lot of red states in there. Sorry folks, we tried to warn you. Guess you’ll have to wait for those tax cuts to trickle down to you:

You’re probably going to be waiting a while.



Screwing the People From Every Angle- Electricity Edition

This is great, and by great, fucking horrible:

As coal mining has collapsed across Appalachia, residents in eastern Kentucky and West Virginia have been socked with a double whammy—crippling electric bills to go along with a declining economy.

The pain in a region once known for cheap power has been felt in homes, businesses, schools and even at volunteer fire departments.

The problem of rising power bills has many causes.

– Mines and other businesses have shut down and people have moved away—mining jobs are off 70 percent since 2010—so utilities are selling less power and spreading their fixed costs across fewer customers.

– Electricity customers are shouldering the costs of shuttering old coal-burning power plants and cleaning up the toxic messes they leave behind.

– And experts say it hasn’t helped that utilities in eastern Kentucky and West Virginia have continued to invest in burning coal.

“They’re doubling down on coal at a time when coal is not competitive,” said James M. Van Nostrand, a professor at the West Virginia University College of Law with decades of experience in the energy field. “It’s really tragic.”

And the only people making out like this are wealthy out of state interests just squeezing every last penny they can out of a dead industry and a region they are killing. Then you have this:

For a little while earlier this year, it seemed as though 87-year-old Rosie Thomas and her neighbors in the small town of Gainesville, Va., had beaten Amazon. Virginia’s largest utility, Dominion Energy Inc., had planned to run an aboveground power line straight through a Civil War battlefield—and Thomas’s property—to reach a nearby data center run by an Amazon.com Inc. subsidiary. After three years of petitions and protests in front of the gated data center, skirmishes punctuated by barking dogs and shooing police, Dominion agreed to bury that part of the line along a nearby highway, at an estimated cost of $172 million.

Within a month, however, the utility and state legislators had passed on the cost to Thomas and her fellow Virginians. The state’s House of Delegates approved Dominion’s proposal to raise the money needed for the Amazon line with an as-yet-unannounced monthly fee. “Lord, have mercy,” Thomas said when a neighbor gave her the news this spring in the gravel driveway of her one-story clapboard home, where she was watching the metal disk spin inside the electricity meter on the side of the house. She was already struggling to pay her monthly $170. Leaning forgotten against Thomas’s mailbox was an old protest sign that read “UNPLUG Amazon Extension Cord.” It no longer felt like a trophy.

This sort of thing is becoming a pattern. Amazon Web Services, the company’s cloud computing business, is its fastest-growing and most profitable division, but it comes with a lot of upfront infrastructure costs and ongoing expenses, the biggest of which is electricity. Over the past two years, Amazon has almost doubled the size of its physical footprint worldwide, to 254 million square feet, including dozens of new data centers with vast fields of servers running 24/7. In at least two states, it’s also negotiated with utilities and politicians to stick other people with the bills, piling untold millions of dollars on top of the estimated $1.2 billion in state and municipal tax incentives the company has received over the past decade.

Amazon’s owner, Jeff Bezos, is the richest man in the world.

We’re also easing out of the summer months into winter, and we can expect the annual Republican assault on heating assistance to take over.

I find myself thinking about this story a lot, lately:

I have some ideas.



Right on Schedule: The Next Phase of the Bust Out

The Republicans are like the mafia, but less subtle:

CNBC’s John Harwood: You were, during the Obama administration, a big critic of rising levels of national debt. We see the deficit going up to $1 trillion next year, debt levels are rising. About the tax cut: Did you guys go about it the wrong way?

Rep. Steve Stivers: I don’t think we did. I think you’ll see the economic growth will actually reduce the deficit a bit from the projected levels. And I think there’s still an opportunity to continue that growth.

Harwood: No misgivings about a tax cut that was not paid for, that’s allowing debt and deficits to rise like it is now?

Stivers: I do think we need to deal with our some of our spending. We’ve got to try to figure out how to spend less.

Harwood: Entitlements? Social Security, Medicare?

Stivers: Yeah, I mean, what I think we need to do is get some people who are now on government programs jobs, we have more open jobs than we have people on unemployment. So if we could get people to go from unemployment, or a government program, to become a taxpayer, it’s a twofer because not only are they getting less government assistance, they probably have a better life economically and they’re actually paying taxes.

Blow up the budget with massive tax cuts to the rich, then use the budget deficits as a pretext to rob more from the poors. Good work if you can get it.

And you thought the re-emergence of Ron Fournier and the no labels motherfuckers was just a coincidence. How long before we’re hearing from Evan Bayh and they’re rolling out the rancid corpse of David Broder?



Kids are expensive

This is not a health policy post, just an observation from my life.

The New York Times reported that fertility rates are declining in America.

Americans are having fewer babies. At first, researchers thought the declining fertility rate was because of the recession, but it kept falling even as the economy recovered. Now it has reached a record low for the second consecutive year.

Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children.

The Times asked the young adults who have fewer kids than they want why. The biggest reason (64%) was that childcare was too expensive. Most of the top responses were some variation on the simple fact that kids are expensive.

They are expensive even when you don’t take them to a baseball game where they want popcorn.

I have two kids. Both are out of daycare. The two of them were in daycare concurrently for two years straight and then my youngest was in daycare by himself for another three years. Paying for daycare was the biggest financial challenge that we have faced, it was a bigger challenge than me being out of work for almost all of 2010.

When my wife and I decided that we wanted to start trying for kid #2, we had a long series of discussions as to how we would handle childcare. We used a community based non-profit daycare for our daughter when we were both working and she was an only child. Its price point for full time care was below the Pittsburgh regional average. The two year overlap between our daughter and kid #2 both needing daycare and the first day of her kindergarten scared the ever living shit out of us. We were both doing okay in our careers. We were both employed at salaried positions, and probably a tad underemployed as this was still during the recovery from the Great Recession.

We had two major options conditional on us having kid #2. The first option was to suck it up, acknowledge that we would be broke and in debt and keep both kids in daycare. The other choice was for us to flip a coin to see who would stay home for two years. We figured that, after accounting for bus passes, work clothes and other job related expenses, one of us would be working solely for daycare expenses for two years. The upside of both of us working is that it would not leave another hole in our resumes, as we were reaching a point where careers either launched or flat-lined.

We decided to be broke. We put both kids in daycare. I went to referee every soccer game that my knees allowed. It was a close call. We lucked out. We made it through those two years and both of our careers were able to launch. Those launches would not have occurred if one of us was out of the labor force.

We also joked that at least paying for college would be easy. California University of Pennsylvania is a state school where I refereed too many games. It is a perfectly decent mid-tier school. In 2018, its tuition and fees for in-state students is less than what I was paying for my son’s infant year of daycare in 2013.

College is far less scary financially than daycare. The biggest difference between college and daycare is financing. I have access to relatively easy/cheap credit for college through the federal college loan programs. I am still paying off a chunk of grad school and will do so for another decade at 2.875%. My kids won’t get the same interest rate but we will be able to finance a year of college at a reasonable interest rate for ten to fifteen years. Daycare required payment in full for the upcoming month by the 28th of the current month every single month. We were paying effectively college tuition in cash every month.

The other, far more important challenge for financing daycare versus college is income life cycle. As cohorts, income tends to increase with age through middle-age and then stabilizes for a while. In less fancy terms, people are far more likely to make more money in their thirties than in their twenties and then they’re also more likely to make more money in their forties and fifties than in their thirties. If there was cheap financing that could shift financial burdens through time like student loans, this would not be a big deal. Daycare has no ten year financing option to shift burdens to better times.

Instead, it is a massive cash outlay at a point in one’s life when the odds of having a lot of cash available is fairly low. Helping my kids pay for college is going to be easy compared to daycare as we are likely to be earning more in nine years when my oldest will be a freshman than we are earning now and we can spread her expenses out over several years. We can also save money with seriously valuable and socially non-productive tax advantages to pre-pay a part of college unlike with daycare.

So when we, as a society, tie so many benefits to work and then tell young adults that they have to come up with state school tuition to pay for daycare in cash, some young adults look at the problem of working and raising kids as an impossibility and therefore they don’t have kids or as many kids as they would want.



What’s going on in Texas

I am not a lawyer, so please don’t take any of the following as informed legal analysis.

The Trump Administration has decided to argue that the $0 penalty individual mandate is unconstitutional and therefore community rated guaranteed issue requirements are unconstitutional as they are non-severable from the mandate. That would destroy the individual market reforms of the ACA.

Take Care has the legal argument and demolition:

In the government’s brief, the Trump DOJ makes two arguments. (A) The individual mandate, which the Supreme Court upheld in NFIB v. Sebelius, is unconstitutional; and (B) because the mandate is unconstitutional, the most important provisions of the Affordable Care Act should also be struck down, on the ground that they are not severable from the now-unconstitutional mandate.

The first of these arguments is excruciatingly stupid, but has the complementary virtue of being irrelevant on its own…

To this we say: Whatever. We’re law professors, and not even we can get worked up about the difference between “do it, or pay the price, which is zero” and “do what you want…”
there are actually instances where severability doctrine is capable of generating clear answers to obvious questions. The easiest case—hard to imagine, but stay with us—would be if Congress actually passed a piece of legislation that eliminated, as a formal or practical matter, one provision of a law, but left the rest of that law in place. In that case, the reconstruction of Congressional intent would be straightforward: What Congress wanted was a law without that provision.

But that is exactly what Congress did in the tax bill, with respect to the Affordable Care Act. And that is what makes the Justice Department’s argument so transparently dishonest.

Yeah, this is dumb.

As a reminder, Jonathan Adler was one of the prime proponents of the “Moops” argument that tried to get subsidies tossed for citizens of states using Healthcare.gov. He thinks this is a bullshit argument.

It is a bullshit set of arguments that are being made in bad faith. And usually that would be enough. But since this is related to the ACA and the district judge is very conservative, we’re may be riding this out for a while as it gets appealed up and down the chain multiple times.

On a pragmatic basis, this introduces uncertainty into the market. Insurers hate uncertainty. They respond to it in one of two ways. They can either run like hell from the market or they can jack up their premiums to incorporate the risk that mid-contract they have to operate under a different regulatory regime.

On a political level, this highlights the popular parts of the ACA (community rating and no denial of coverage for pre-exisiting conditions) just as the election season heats up.



Now On to the Next Phase of the Looting

Pete Peterson might be dead, but the GOP quest to gut Medicare and Social Security marches on:

The financial future of the part of Medicare that pays older Americans’ hospital bills has deteriorated significantly, according to an annual government report that forecasts that the trust fund will be depleted by 2026 — three years sooner than expected a year ago.

The report, issued Tuesday by a quartet of Trump administration officials who are trustees for Medicare and Social Security, reveals that policy changes ushered in by the president and the Republican Congress are weakening the financial underpinnings of the already-fragile insurance program.

According to the report, less money will be flowing into the hospital-care trust fund in part because the tax law passed this year will cause the government to collect less in income taxes. In addition, lower wages last year will translate into lower payroll taxes.

As revenue slips, hospital expenses will increase, the report says. A senior government official who briefed reporters on it said that part of that increase is because the tax law will, starting next year, end enforcement of the Affordable Care Act’s requirement that most Americans carry health insurance. As a result, hospitals are predicted to have more uninsured patients, in turn requiring the Medicare program to pay more for such uncompensated care.

Literally everything the Republicans are doing is a direct attack on the American people.



Back to the phones

You know what to do — call your Senators and let them know your thoughts.