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In Newsweek's cover story this week, Harvard economist Niall Ferguson calls the U.S. "An Empire at Risk": "If the United States succumbs to a fiscal crisis, as an increasing number of economic experts fear it may, then the entire balance of global economic power could shift." Paul Krugman responds: "These [debt] numbers look huge, but our entire economy is huge."

Gee, Paul, maybe that's why Ferguson is using percentages, rather than absolute numbers, to make his point.

Kenneth Feinberg, Pay Warrior

"There’s no particular reason why senior executives should always be the best-paid employees in any organization. Quite the opposite, in fact."

While I've seen organizational theories that would advocate paying top-selling salespeople with variable comp more than corporate staff, even at the C-suite level, or line managers, I don't know of much in the way of any theory that says that any other employees (outside of sales) should ever be paid more than the most senior executives. Otherwise, why not leave the company at the seniority level at which the pay/work effort ratio maxes out? If that level is, say, "Director" or "VP", as opposed to "CEO", that company is going to have a heck of a time recruiting anyone good to be anything above a Director or VP.

NY Fed confirms that it's experimenting with "triparty" reverse repo agreements, but says their actual use is not imminent. In a reverse repo, the Fed pledges mortgage-backed securities and Treasurys it bought as collateral for short-term loans, thereby draining cash from the financial system. (previously)

I'm suddenly reminded of this Onion classic:

www.theonion.com/conte...

These people are insane.

The first step to fixing the SEC is adequate funding and staffing, Barry Ritholtz says, which is easily forgotten when people fixate on political polemic instead of pragmatism. "It's not sexy, it's not fun, it's administrative policy wonk junk," he says. "And as the government has gotten demonized, it becomes even less likely for departments to get proper funding, or to accomplish their basic goals."

If government is so "demonized" and lacking funding, why does the government's total budget keep increasing? It seems like government is humming along spending money, but political priorities differ from the country's true needs, unsurprisingly.

Life Settlements: Still No Dice

There were already some rumblings in a couple of states (I recall Oregon was one) about life policies losing their tax-exempt status earlier this year. With the massive deficits at every level of government, you can see why this is so.

Four Problems Undermining Future American Prosperity

"Solutions that serve some public good—like Social Security and bank deposit insurance in the 1930s and Medicare in the 1960s—usually require everybody to give something to get something."

While bank insurance is a more complex topic, I think it's premature to say that Social Security and Medicare are "good" programs, especially with their unfunded liability structures. The original recipients of Social Security got an annualized return (SS income versus SS payroll taxes contributed) equivalent to something like 20%/year. This annual return metric has been declining to the point where for someone in Generation X, the return will likely be 1%/year. Similarly with Medicare, the amount paid in by those now collecting benefits (Medicare payroll taxes versus the amounts Medicare is reimbursing health care providers for those payroll tax payers' care) seems to indicate that the returns on those taxes are significant. I haven't seen these numbers anywhere, but I am making a logical deduction from the fact that Medicare is facing huge unfunded liabilities, meaning that it is not matching its assets and its liabilities very well. Politically, this is because it is difficult to raise Medicare taxes, and rightfully so. Again, for Generation X, Medicare is not likely to provide similar returns as it has for previous generations because A) the cupboard will be bare after the Boomers and B) what program there is left will probably be means-tested in such a way that a good chunk of Generation X will be ineligible for the program and C) providers' reimbursements will be so miniscule that they will refuse to see Medicare patients (already happening and will likely intensify) and D) even when providers do agree to see Medicare patients, the waits will be so long that for certain conditions, it will be just as useful as not seeing a provider.

So, like all Ponzi Schemes, these programs SEEM to be "good programs", but they are unsustainable over the long-term.

Four Problems Undermining Future American Prosperity

The top 1% already pay significantly more, as a percentage of overall income tax, than they earn as a percentage of income. The reason for this, of course, is that there are many income earners who pay no tax.

Secondly, the author's point is that there are not enough rich people to support a broad middle-class entitlement for health care, based on either income or payroll taxes. The tax levels would have to be so high that they would be economically painful. Thus, like Social Security and Medicare, the middle class needs to put in its own money to support something that broad, just as neither SS nor Medicare could be supported by a payroll tax on just high-earners.


On Sep 03 07:29 AM Michael Clark wrote:

> Another note on this same topic: the middle class is currently disappearing,
> because the top 1% of the population (the Filthy Rich) wanted MORE
> and MORE.
>
> The idea that the top 1% of America is a VICTIM...please give me
> a break. If the richest pay a few more % in taxes it will NOT substantially
> diminsh their life style. What does it mean: one fewer beach house;
> one less trip to Europe each year; one yacht instead of two? <br/>
>
> The top 1% owns the government, owns the lawyers, owns the stock
> market, owns the society. The most fortunate SHOULD be the most
> willing to repay a society that allowed them to take over almost
> everything.
>
> No Health-care for the poor? Let them eat cake?
>
> As for the rich? Let them eat dirt, instead of the food that the
> poor people grow for them.

Six Suggestions for Health Insurance Reform

"We can run healthcare just like the public schools"

The average student in the graduate schools of education in the US has the lowest standardized test scores and undergraduate GPA of any cohort going on from undergraduate to graduate school. Medical school is just the opposite. Start running health care like the public schools and you will just start attracting lower-quality candidates to medical school.


On Aug 10 08:12 AM rkwriter wrote:

> Licensed Aflac agent - that says it all. So much misinformation
> here it's hard to know which scare tactic to address first. Like
> over 25 million Americans I am paying over 10% of my income on healthcare
> costs. My brother, in Massachusetts, pays $104 a month. Families
> I know up there pay $254 a month for complete coverage. Down here
> in NC most families I know pay between $650-$1300 a month.
>
> We're paying for insurance anyways, so I'd be more than willing to
> pay more in taxes because my overall bill would still be much lower.
> One practice in Washington State stopped taking insurance(they claimed
> 60% of the cost of a doctor's visit is to pay for paperwork going
> back and forth between insurance companies and health care providers),
> started 'insuring' their patients through a monthly fee at their
> office, ranging from $54 to a top of $159. The only thing the patients
> pay for are medicines. They also are suggested to buy their own
> catastrophic insurance(which you can get really cheap). Everything
> else is covered.
>
> We can run healthcare just like the public schools - doctors get
> a set reimbursement fee per patient, irregardless of their health
> profile. That fee will be lower than the average private insurance
> fee, but will still be more than enough to pay doctors high six figure
> incomes. A set fee will encourage an emphasis on wellness and the
> avoidance of unnecessary tests.
>
> As for the scare tactics about European healthcare - every single
> person I know in Canada, England, France is satisfied with their
> healthcare. They pay 50% less per year than the average American
> and by any standard of measurement they receive higher quality healthcare.
>
>
> Lower cost, better care - only a fool, or a greedy capitalist, would
> object to that.

Economist Joseph Stiglitz writes that you can't answer the question of whether Keynesian economics has failed - because it hasn't really been tried yet. More stimulus, please.

At $787 billion (plus interest) that stimulus has to be the most expensive "non-trying" of something in history. How did intellectual discourse get so degraded in the West, that this passes for smart thinking?

With bloated, TARP-assisted earnings, comes the return of good old class resentment: "It's not merely that Americans have, at least temporarily, abandoned the hope that they'll earn scads of money. It's the widespread sense that winners in this economy are produced by a game that's rigged."

Agreed. I have a fancy MBA, but I went into consulting instead of i-banking (those were basically your two career options coming out of my b-school) and I am appalled at what people of "my" class are getting away with here. It especially frosts my nads because I pay higher tax rates than the average schmoe and it's all going to the same guys that sat next to me in Finance class. WTF?


On Jul 19 12:20 AM Vuke wrote:

> Resentment at theft has nothing to do with class. Too many, in too
> many ways, are slurping at the public trough.

From the CBO Director's Blog: "Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario."

"Men go mad in herds and recover their senses individually"


On Jul 17 02:33 PM Teutonic Knight wrote:

> speeddairmon -
>
> They most likely won't listen.
>
> Did they ever listen to those who predicted the crisis as chronicled
> by SA author Dr.John Lounsbury in a recent SA artcle - "Did anyone
> see the Crisis coming?".
>
> Noopp! It is a phenomenon called "Mass Self-Hypnotization" for which
> there is no known cure, as yet.
>
> TK

Unwise to Tax the Rich to Pay for Health Care

I agree, it is extremely creepy, not to mention the kind of thing that thugs use to divide and conquer.


On Jul 16 03:03 PM WilliamQuigley101 wrote:

> One other observation I take away from these posts. Most of the people
> in favor of raising taxes 'on the rich' really mean 'not on me'.
> Someone here argued that the House sponsored health care bill was
> fine since only 1.2% of the US population would be financially penalized.
> Maybe I am a minority on this issue, but I find it unseemly when
> the national dialogue starts turning to arguments like 'we are only
> going after a few percent of Americans, so the rest of you keep your
> mouths shut'. Its creepy. How many times must humanity repeat this
> mistake. Targeting an unsympathetic minority for abuse in order to
> benefit the greater populace can never bring social cohesion to a
> society. Once you demonize a social class, it becomes harder to reign
> in that impulse. The Balkins provide a recent view into how that
> process ends.....

Unwise to Tax the Rich to Pay for Health Care

Maybe start by counting the number of "chronic" uninsured, as opposed to those who either chose not to be insured because they don't perceive the need, those who can afford it but choose not to, those in between jobs who go uninsured for less than a few months, etc.

Face the facts, you have to lie and mangle statistics to make your ideology seem "reasonable". Up yours with your false "dilemmas". You're so concerned about it, adopt an uninsured person and pay their insurance premium. Just leave me alone.


On Jul 16 02:46 PM LeoTheDog wrote:

> So, William, your proposal to address the crisis of 50 million uninsured
> Americans is:
>
> 1. Do nothing, the status quo is fine; or
>
> 2. ______________?
>
> Just curious.

Unwise to Tax the Rich to Pay for Health Care

Total taxes paid dropped because there was a recession, idiot.

I have zero interest in your single-payer BS, which would eventually bankrupt the country. I do just fine with the health insurance I have now through my employer, thanks. In fact, I have zero interest in anything you're selling. I'm a libertarian (obviously) and I feel less intruded upon when there are Christian conservatives in power than I do when there are lefties always poking around in my wallet. My money's got stuff to do for me, not to go to however many millions uninsured people there are. I simply do not care about them, you or anything else that I chose not to care about. Why can't you get that through that thick head of yours?


On Jul 16 02:27 PM LeoTheDog wrote:

> Interesting tact. As their tax rates (and total taxes paid) dropped,
> their percentage of total taxes collected went up. Nice use of statistics
> to distract from the fact that the wealthy have done quite nicely
> over the last decade, and have seen their incomes and, yes, wealth,
> increase far more than for the middle-class. Contrary to what you
> might believe, few people enjoy the imposition of new taxes, even
> among liberals. We just understand that there are some things we
> need that we don't currently have, and those things cost money. We
> think it makes sense to have those who can most afford to pay, pay.
> Crazy thinking, I know.
>
> Of course, looking to your tables one can see that the House's reform
> bill, which seeks to increases taxes on the top 1.2% (not 10 or 25%
> as you erroneously suggest) would affect only those whose taxable
> incomes exceed $400,000. Do you understand this fact? Really, do
> you? Nearly 99% of the country will see no tax increase under this
> proposal, but you've got your panties in a bunch over the increase
> for the top 1.2%.
>
> So, cry me a river. If you make $400k and you can't or won't pony
> up an extra $40 per month to help address the embarrassment of having
> 50 million uninsured (and tens of millions more underinsured), then
> I'm not terribly sympathetic.
>
> Of course, there is a simpler, more effective and FAR less costly
> option available: it is called single payer and it would actually
> save the federal government money over the next decade rather than
> cost us $1 trillion. Tell you what, you agree to single payer and
> I'll agree to cut taxes FOR THE RICH by the amount of the savings
> generated by our new system. Deal?

Unwise to Tax the Rich to Pay for Health Care

I just have one question: Do you live your entire life guided by false data or is it just vis-a-vis taxes?

www.taxfoundation.org/...

Scroll down to Table 6 and tell me what proportion of total income taxes "the rich" (use the top 10% or top 25% since those are probably the folks you want to soak) paid under Clinton and under Bush.

Now go ahead and move the goalposts to something like "but they own all the wealth and we don't have a wealth tax" or make some conceptually-flawed "marginal utility" argument.


On Jul 16 01:55 PM LeoTheDog wrote:

> Actually, the rich have been paying a lot less than they used to
> for several years, courtesy of the Bush tax cuts. Obama's plan to
> raise tax rates to their 1990's levels would "ruin" the economy only
> if you don't understand or believe in history. Adding an additional
> "burden" of $500 per year for those making $400,000 a year (yes,
> about $40 per month) to enable this country to extend health insurance
> to virtually everyone seems pretty reasonable to me. Frankly, the
> financial benefit of universal healthcare is likely to be worth more
> than $500 to someone making $400k, if for no other reason the reduction
> in health insurance premiums and fewer bankruptcies.
>
> That said, I have no objection to a tax increase being applied to
> all income brackets for the purpose of funding healthcare--it just
> seems more equitable that the larger share should fall on the shoulders
> of those most able to pay.