Repeal and Delay with the Norquist problem

Right now, the current Republican plan is Repeal and Delay as the NY Times reports:

Republicans in Congress plan to move almost immediately next month to repeal the Affordable Care Act, as President-elect Donald J. Trump promised. But they also are likely to delay the effective date so that they have several years to phase out President Obama’s signature achievement.

This emerging “repeal and delay” strategy, which Speaker Paul D. Ryan discussed this week with Vice President-elect Mike Pence, underscores a growing recognition that replacing the health care law will be technically complicated and could be politically explosive.

The mechanics of the repeal bill are fairly straightforward. A reconciliation bill would be written to sunset subsidies and Medicaid Expansion money after two (or three) years while a Replace bill is cobbled together. The individual mandate tax would be dropped to zero even if it was not technically repealed and all of the taxes that fund the ACA would be dropped immediately. This blows up the insurance market fast. There are discussions and rumblings that some Republican wonks are trying to make this point to Republican leaders. Someway of shoveling a massive amount of cash to insurers would be needed that would perform the same function as risk corridors and reinsurance but called something else is the most likely response.

And then there would be some type of Replace bill that would offer skimpier subsidies and much higher cost sharing than current law.

That Replace bill will cost money. It won’t cost as much money as the ACA but it will cost money.

That is a major problem as the major funding streams from the ACA (Cadillac Tax and high income tax surcharges) are gone. Nicholas Bagley at the Incidental Economist flagged this very early on:

You’ve got to bear in mind that passing the reconciliation bill would represent an immediate $346 billion tax cut over ten years to the wealthy—$123 billion from the Medicare tax surcharge and $223 billion from the tax on investment income. All of that money—every dime—will go to people making more than $200,000 a year.

The other major source of funding for the ACA is the Cadillac tax in the out years and Medicare Advantage payment equalization. The Cadillac tax is popular with health economists who, when they concentrate for an annual convention, might have sufficient political power to elect a county commissioner in an NFL market and no one else. The Republican Replace plans use modified Cadillac plans that usually apply regular income tax rates to health insurance benefits at far lower thresholds than the Cadillac tax. But I digress.

The Replace plan will cost money. And here is where we run into the Norquist problem. It is Republican orthodoxy that once a tax cut is passed it can never be re-enacted. The Replace Bill would not be signed for at least six months (absurdly optimistic case scenario) after the Repeal bill that wiped out the high income taxes that fund the ACA. The Congressional Budget Office (CBO) would score Replace based on current law which means no high income surcharges as offsets. Republicans can’t vote for higher taxes per Norquist even if those are taxes that just got cut.

Assuming Norquist is still a major political enforcer of Republican orthodoxy, my best bet is that any Replace Bill will be like the 2003 Medicare Modernization Act (MMA) in that it is almost completely deficit financed.

The Ad That Will Win the Election

I can see it now:  Testimony of parents who have contracted Zika virus and given birth to babies with microcephaly, overlaid with comments by Republican Members of Congress, explaining why they delayed the vote on Zika funding by 3 months, and underfunded it by 1/3.

Isn’t this the Daisy ad of this election, or am I missing something?

The Carson Show Rolls On

The petabytes of information that would compose the voluminous tomes of Things Ben Carson Doesn’t Know A Damn Thing About now includes an updated entry on the debt ceiling in this interview with Marketplace’s Kai Ryssdal.

Ryssdal: All right, so let’s talk about debt then and the budget. As you know, Treasury Secretary Lew has come out in the last couple of days and said, “We’re gonna run out of money, we’re gonna run out of borrowing authority, on the fifth of November.” Should the Congress then and the president not raise the debt limit? Should we default on our debt?

Carson: Let me put it this way: if I were the president, I would not sign an increased budget. Absolutely would not do it. They would have to find a place to cut.

Ryssdal: To be clear, it’s increasing the debt limit, not the budget, but I want to make sure I understand you. You’d let the United States default rather than raise the debt limit.

Carson: No, I would provide the kind of leadership that says, “Get on the stick guys, and stop messing around, and cut where you need to cut, because we’re not raising any spending limits, period.”

Ryssdal: I’m gonna try one more time, sir. This is debt that’s already obligated. Would you not favor increasing the debt limit to pay the debts already incurred?

Carson: What I’m saying is what we have to do is restructure the way that we create debt. I mean if we continue along this, where does it stop? It never stops. You’re always gonna ask the same question every year. And we’re just gonna keep going down that pathway. That’s one of the things I think that the people are tired of.

Ryssdal: I’m really trying not to be circular here, Dr. Carson, but if you’re not gonna raise the debt limit and you’re not gonna give specifics on what you’re gonna cut, then how are we going to know what you are going to do as president of the United States?

Carson: OK, let me try to explain it in a different way. If, in fact, we have a number of different areas that are contributing to the increasing expenditures and the continued expenditures that are putting us further and further into the hole. You’re familiar I’m sure with the concept of the fiscal gap.

Ryssdal: Why don’t you explain that a little bit, though.

Carson: OK, well, the fiscal gap is all of the unfunded liabilities that the government owes. Medicare, Medicaid, Social Security, all the departmental programs, all the agency and sub-agency programs extending into the future, which is a lot of money, versus the amount of revenue that we expect to collect from taxes and other revenue sources. Now if we’re being fiscally responsible, those numbers should be fairly close together. If we’re not, a gap begins to occur. We bring that forward to modern day today’s dollars, and that’s the fiscal gap, which sits at over $200 trillion and is continuing to grow. Now the only reason that we can sustain that kind of debt is because of our artificial ability to print money, to create what we think is wealth, but it is not wealth, because it’s based upon our faith and credit. You know, we decoupled it from the domestic gold standard in 1933, and from the international gold standard in 1971, and since that time, it’s not based on anything. Why would we be continuing to do that?

Oh good, in addition to knowing jack squat about foreign policy, criminal justice issues, the workings of the US Constitution, and basic civics, ol Doc McNothins here has no idea how modern macroeconomics works either, because we owe a bajillion zillion trillion dollars in unfunded liabilities because America’s GDP is just going to go to zero tomorrow and how can we pay for Medicare in 2065 because argle bargle collapse of all fiat currency GOLD WEED END THE FED.

Meanwhile, Ben’s over here reading Louie Gohmert’s bookmarked posts on Zero Hedge and going “You know, we don’t really need to pay for budget debts we’ve incurred because I’ll just magically cut waste so we don’t need to ever raise the debt ceiling.”

That seems like it’ll work.  Can’t wait until he overtakes Trump on which cartoon idiot is winning the beauty contest.

We’re On A Road To Nowhere

I’m curious to see how far this proposal to raise the federal gas tax goes before the Republicans completely kill it and then complain about how Democrats don’t have any proposals to fix America’s crumbling transportation infrastructure.

Sen. Tom Carper (D-Del.) is introducing legislation that would nearly double the 18.4-cents-per-gallon federal gas tax to help pay for road and transit projects around the nation.

Carper’s bill would increase the gas tax by 4 cents per year for the next four years, resulting in a 16-cents-per-gallon increase by 2020. 

The legislation would offer tax credits to offset the impact of the gas tax hikes on drivers, according to Carper’s office.

The Delaware senator said the failure of Congress to pass a long-term transportation bill this summer showed it is time to raise the gas tax, which has not been increased since 1993.

“Rather than lurching from crisis to crisis, increasing country’s debt, and borrowing more money from foreign governments to pay for our transportation system, I say it’s time to do what’s right,” Carper said in a statement, referring to the three-month transportation funding patch that was approved by Congress before lawmakers left for recess last month.

“At a time when gas prices are some of the lowest we’ve seen in recent memory, we should be willing to make the hard choice to raise the federal gas tax,” Carper continued. “To balance the 16-cent cost of a gas tax hike, I’ve suggested making permanent certain expiring tax cuts that will directly benefit hard-working Americans.”

Naturally, since this is a reasonable attempt at actual governance, it will immediately explode into flames along with several highways and bridges before the end of the year.

We have hundreds of billions, if not trillions in infrastructure repair and rebuilding needs in this country, and nobody in charge seems to want to actually do anything about them.

Oh wait, President Obama did, but that plan was instantly killed by the party we rewarded with control of Congress.  That seems like that’s working out.

Greeced Skids

The Kroog points out that despite five years of doing everything that it was told to do by the troika and sucking down that Good Ol’ Austerity Juice, Greece still finds itself in the bank holiday/capital control stage of the mess that it was supposed to avoid.

But doesn’t the ultimate cause lie in wild irresponsibility on the part of the Greek government? I’ve been looking back at the numbers, readily available from the IMF, and what strikes me is how relatively mild Greek fiscal problems looked on the eve of crisis.

In 2007, Greece had public debt of slightly more than 100 percent of GDP — high, but not out of line with levels that many countries including, for example, the UK have carried for decades and even generations at a stretch. It had a budget deficit of about 7 percent of GDP. If we think that normal times involve 2 percent growth and 2 percent inflation, a deficit of 4 percent of GDP would be consistent with a stable debt/GDP ratio; so the fiscal gap was around 3 points, not trivial but hardly something that should have been impossible to close.

Now, the IMF says that the structural deficit was much larger — but this reflects its estimate that the Greek economy was operating 10 percent above capacity, which I don’t believe for a minute. (The problem here is the way standard methods for estimating potential output cause any large slump to propagate back into a reinterpretation of history, interpreting the past as an unsustainable boom.)

So yes, Greece was overspending, but not by all that much. It was over indebted, but again not by all that much. How did this turn into a catastrophe that among other things saw debt soar to 170 percent of GDP despite savage austerity?

The euro straitjacket, plus inadequately expansionary monetary policy within the eurozone, are the obvious culprits. But that, surely, is the deep question here. If Europe as currently organized can turn medium-sized fiscal failings into this kind of nightmare, the system is fundamentally unworkable.

For whatever reason, this time around was different, as they say. Maybe PM Alexis Tsipras miscalculated, maybe the troika miscalculated, Junker and Merkel and the like, but the rules of the EuroCalvinball changed and now we’ve got ATMs across Greece closed today and a whole lot of people asking a whole hell of a lot of questions.

The other lesson is austerity kills economies, as can be evidenced from Greece to Kansas to the UK to Puerto Rico. I’m not sure how many more financial meltdowns we need to get this into the heads of the suits that make the decisions, but you don’t need a Nobel Prize in order to figure out that maybe drastic reductions in spending for programs that people depend on isn’t the way to save a struggling economy.

We Don’t Need No Education

Ol’ Perfessor Glenn Reynolds argues that America needs a college dropout like Scott Walker in the White House dammit, because really we’re a country of stupids rock-ribbed salt-of-the-earth types who need a stupid man of the people to lead us.

Though Walker attended Marquette University, he left before graduating, which has caused some finger-wagging from the usual journalistic suspects. After all, they seem to believe, everyone they know has a college degree, so it must be essential to getting ahead. As the successful governor of an important state, you’d think that Walker’s subsequent career would make his college degree irrelevant, but you’d be wrong.

And that’s why a President Walker would accomplish something worthwhile the moment he took office. Over the past few years in America, a college degree has become something valued more as a class signifier than as a source of useful knowledge. When Democratic spokesman Howard Dean (who himself was born into wealth) suggested that Walker’s lack of a degree made him unsuitable for the White House, what he really meant was that Walker is “not our kind, dear” — lacking the credential that many elite Americans today regard as essential to respectable status.

Instagoofball goes on like this for a while, but the bottom line is a tenured law professor is arguing that the leader of the free world really doesn’t need a degree because really, only elitists view “education” from a “university” or “college” as “valuable” compared to experienced governatin’.

In other words, America really needs to set its sights lower than that elitist Ivy League snob George W. Bush to get a Real American(tm) in the White House.  He was terrible, so what we really need is somebody less educated than him.

Perhaps a Walker/Palin ticket would guarantee the lack of elitist thinking that’s been holding America back these last several decades.  After all, if we can’t expect the President of the United States to finish college, why should we go out of our way to make sure any of you have the opportunity for it, either?

You don’t want to be an ivory tower egghead, do ya?

E-A-T M-O-R…

Remember Trestin Meacham, the Utah man who was on a weeks-long hunger strike to oppose same-sex marriage? Looks like he can go ahead and snarf down a Chick-fil-A with a side of hate today:

Marriage equality advocates were dealt a heavy blow on Monday, as the U.S. Supreme Court moved to grant Utah’s request for a temporary halt on same-sex nuptials.

The decision ends a two-week stint of gay couples’ marrying in the Mormon-dominated state, one of the reddest in nation and the 18th to legalize same-sex marriage. All weddings between couples of the same sex will now be on hold until an appeals court hears the case.

Bummer for those who were hoping Meacham would self-deport from the planet. On the other hand, the article John cited in the earlier post linked above said this:

Meacham claims he will fast until Utah decides to nullify the court’s decision — nullification being a theory that the states have authority in all matters, not the federal government.

And since Utah sought a stay from the US Supreme Court rather than nullifying a federal court decision, technically, Meacham should continue to starve himself to death in a bigoted snit. But I’m betting he leaps on this ruling like a homophobe on a ham sandwich.