Category: News and Opinion

The majority of economists trained in the classical tradition believe there is a public policy tradeoff between distributional equity and economic efficiency; to get more of one, you get less of the other. But the U.S. health care finance system is an exception to that rule, as it is both inequitable and inefficient. You read about the inequities in my prior post; this post is about the economic damage. By tying the availability of affordable health insurance to group plans provided by employers, the current system prevents many workers from moving to jobs where they could be better compensated. It also dissuades them from becoming entrepreneurs, or becoming freelancers by choice, if that is what they would prefer. Therefore, the link between employment and health insurance has created a kind of economic serfdom for millions of Americans. For low, moderate, and middle income households lacking health insurance, since an serious illness or injury would wipe them out, the lack of such insurance means it is irrational to save. And, the burden of providing health insurance for middle-aged and older people has made older companies — and communities — uncompetitive with newer, growing firms and taxing jurisdictions. This sets up a merry-go-round in which the former are abandoned for no other reason than the age distribution of their employees, stranding those employees and residents and wasting capital, infrastructure and other resources. That issue is going to become critical as large swaths of suburban and Sunbelt America go into decline in the wake of the housing bust, and confront fiscal crises similar to what older northern cities faced in the 1970s.

There are many reasons for inequality. Some are blessed, by God and by nature, with great intelligence, athletic ability, or beauty; others cursed by congenital handicaps, disabilities, and diseases. Some are born into loving and stable families; others into broken homes filled with drugs and abuse. Some parents have the money required to induce the broader society to provide their children with extensive resources and support; others have little money, and must raise their children in unsupportive environments. All these advantages and disadvantages are present even before a person begins to make his or her own choices and mistakes. For the worst off, mistakes made in youth – with drugs, violence, sexuality, relationships, learning – often cannot be recovered from later on. Some of us would like to see government policies reduce the level of this “naturally occurring inequality,” and some would not.

Rudy Giuliani's truly pathetic showing in the Michigan Republican Primary – he finished 6th with 2.8%, over 30,000 votes behind Ron Paul has been largely ignored by the pundits who are instead talking about Romney's win and what happens next.

In fact some of the pundits are saying the results help Rudy.

But Michigan continues a pattern of Rudy's support dropping in every state from sky high poll numbers to a low number of actual votes.

Let's look back at some facts that Rudy's campaign doesn't want anyone to remember.

At the beginning of 2007, Rudy led every poll in Iowa. According to Real Clear Politics, there were 4 polls made public between January 16 and February 18 and Rudy led them all, with 29% in the Feb. 18 poll. As recently as the November Iowa State University poll, he was 3rd with 16% of the vote. But when the Iowa Republicans actually voted, Rudy finished 6th with 3.5%!

Twenty-five years ago those running the federal government made my generation, and those after, a promise: pay a vastly higher regressive payroll tax throughout your lives and accept a later retirement age, and Social Security will be there to keep you out of poverty in your later years. That promise was made by the eight Republicans and seven Democrats, led by Alan Greenspan and appointed by President Reagan, who made up the 1982 National Commission on Social Security Reform, by the Congress that adopted its recommendations, and by the President who signed them into law in 1983. With all the extra payroll taxes since collected over and above those required to pay benefits, plus interest, the rest of the federal government owed Social Security nearly $1.9 trillion dollars as of FY 2006. And now for the two questions that cut through all the bullshit about Social Security.

Where will the rest of the federal government get the $1.9 trillion to pay back Social Security? Well, it will either have to drastically increase taxes, drastically slash other services and benefits, or drastically increase the federal budget deficit – leading to even higher taxes or even greater service and benefit cuts when those higher debts have to be paid. In other words it is those of at the back end of the baby boom, and those younger, would have to sacrifice to pay Social Security back. The federal government has no money of its own. It will have to get it from us. But wait a minute! If we have already been paying in extra for Social Security in the past, how come we will have to pay for it again in the future? Because the extra money that was collected in the past was spent in the past, and substituted for the personal income tax that was cut in the past. Not only that, but during the past 25 years the federal government borrowed even more money on top of that, and we will have to pay that back too.

Tuesday brings us the news that Gerald Rafshoon and Doug Bailey, founders on Unity 08 have started something called DraftMichaelBloomberg.com<

According to Elizabeth Benjamin at the Daily Politicker –

Unlike some of the other efforts, one of which is already circulating petitions to get Bloomberg on the ballot in Virginia, Bailey and Rafshoon said they will not be running a ballot-access campaign. Instead, they will be raising money to focus on wooing the mayor and building public support with an ad campaign – both on-line and in print.

Here we go again; here we go again; is there an end in sight? Maybe the fact that I support Barack Obama is the reason why some of you out there in blogland refuse to admit my truths; so I will plod through this one, and maybe then you tell me where I am wrong.

In this presidential campaign cycle, we have now seen on many occasions supporters of Hillary Clinton making disparaging statements about Barack Obama. It happened again last night. On cable television station New York One. Congressman Charlie Rangel-a rabid Hilary Clinton supporter- displayed signs of his rapidly encroaching senility, when he called Barack Obama a fool. The program was “Inside City Hall”, and the host was Dominic Carter. He further said that some of Barack’s statements (supposed) on the MLK, JFK and LBJ issue were stupid and dumb. And I am now told that he even went on CNN to say that Obama was an “absolute idiot”; is this true?

I don’t know where Rangel heard these things, thus I could only assume that he is losing it-his mind,that is. Barack Obama has never uttered a negative word against Hillary’s remarks, beyond saying that they were “ill-advised”. That’s it. Period. He never called her names or even suggested racism from her remarks; in fact he went public to say she works in the area of civil rights.

Tim Russert is an exceptionally good broadcast journalist. I say this with no ambiguity. However, like every one of us, sometimes you just have a bad day. Tim Russert had a bad day at the office yesterday. Regularly on a Sunday morning, political junkies all over the world, tune in to NBC to watch his “Meet the Press” program. He generally brings in elected officials and prominent political people, to answer tough questions about contemporary issues. He is quite good at what he does. Yesterday he brought in Hillary Rodham Clinton.

If someone was to ask me to use one word in summing up yesterday’s performance by Tim Russert, it would be: pusillanimous. From jump-street, he seemed ruffled by Hillary Clinton’s brashness and recalcitrance. He dropped the ball many times. In this column I will give you six areas of questioning that Russert should have asked-or followed up on- to answers HRC gave. These questions relate to just on one issue alone: the controversy swirling around her Martin Luther King, John F. Kennedy, Lyndon B. Johnson and Barack Obama remarks. When you are through reading them, then imagine what would have happened if I had delved into other issues. Enjoy.

As the Presidential posturing continues, is anyone interested in what Presidents have actually done with our money over the past 30 years? The Reagan defense buildup, the peace dividend, and the War on Terror explain much of the variation in total federal expenditures as a share of Gross Domestic Product over the past several administrations. Despite an aging population, spending on Social Security is at about the same share of GDP today as it was in the Carter Administration, although this is about to change as the baby boomers retire. Federal health care expenditures, which primarily benefit senior citizens, have soared as a share of GDP, although that growth was slower during the Clinton Administration. Federal spending on investments in the future – science, space and technology, energy, natural resources and the environment, community development and transportation – is much lower as a share of GDP than it was before the Reagan Revolution, though it has tended to increase somewhat under Presidents named Bush. Presidents named Bush also increase federal spending on the poor as a share of GDP, but overall spending on the poor is down as a share of GDP since the Carter Administration, with big shifts in the nature of that spending during the Reagan and Clinton administrations. And we’re lucky interest rates are low, because although the national debt is up as a share of GDP, the cost of interest payments has fallen, and a reversal of that trend could cause a downward economic spiral.

In January of 1980, I started attending Columbia University in New York; it was a presidential election year. Ted Kennedy was reluctantly challenging President Jimmy Carter for the Democrat’s nomination. With freshman excitement I followed the on-campus involvement in the race between these two. Then one day Ted Kennedy came to our uptown campus, bringing media, cameras and controversy. You see, some imaginative white kid (and believe me when I say that at Obama’s alma-mater Columbia U, kids of all races and ethnicities were very very imaginative in my day there) stole the show.

This youngster stole the headlines in the newspapers- and the highlights on television- when he placed a large colorful cardboard placard behind Ted Kennedy’s head. It said: “Will You Test Drive a Used Car With This Man?”

As demonstrated in my prior post, the Reagan Administration cut personal income taxes and subsequently raised payroll taxes, theoretically to save Social Security but in reality to pay for the income tax cut and other things. More on the other things later. Despite significant tax changes under subsequent administrations, this tax shift remains in place. In addition, the income tax code has been made vastly more complicated by higher rates combined with more deductions, exemptions, preferences, and favors, starting with the Clinton Administration and continuing in the administration of President George W. Bush. The same process has occurred at the state and local level in New York, with former Governor Pataki handing out this deal and that and sending checks, Mayor Bloomberg adding his own check, and former Mayor Giuliani pushing a special sales tax deal for clothing and cutting taxes for any individual company that got into his office and threatened to move to New Jersey. This is something that certainly didn’t change on Day One of the Spitzer Administration. In recessions, tax rates are raised to make of the lost revenue and service the debts. So, with payroll taxes up and income taxes down, and with tax rates rising and tax deals proliferating, who wins and who loses?