“A Party Of Spineless Legislators”: John Boehner’s Failure And The GOP’s Disgrace
Remarkably, John Boehner couldn’t get enough House Republicans to vote in favor of his proposal to keep the Bush tax cuts in place on the first million dollars of everyone’s income and apply the old Clinton rates only to dollars over and above a million.
What? Even Grover Norquist blessed Boehner’s proposal, saying it wasn’t really a tax increase. Even Paul Ryan supported it.
What does Boehner’s failure tell us about the modern Republican party?
That it has become a party of hypocrisy masquerading as principled ideology. The GOP talks endlessly about the importance of reducing the budget deficit. But it isn’t even willing to raise revenues from the richest three-tenths of one percent of Americans to help with the task. We’re talking about 400,000 people, for crying out loud.
It has become a party that routinely shills for its super-wealthy patrons at a time in our nation’s history when the middle class is shrinking, the median wage is dropping, and the share of Americans in poverty is rising.
It has become a party of spineless legislators more afraid of facing primary challenges from right-wing kooks than of standing up for what’s right for America.
For all these reasons it has become irrelevant to the problems America faces.
The Republican Party is in the process of marginalizing itself out of existence. I am tempted to say good riddance, but that would be premature.
By: Robert Reich, Robert Reich Blog, December 20, 2012
“The Republican Winter Carnival”: Will John Boehner’s Speakership Survive Until Plan C?
Has there been a House speaker in modern American history with less control over his members than John Boehner?
Over the past three days, Boehner has focused all attention on “Plan B”: an effort to strengthen his hand in negotiations with President Obama by passing backup legislation that would extend the Bush tax cuts for all income under $1 million.
Tonight, Boehner lost that vote. In a dramatic turn of events on the House floor, he pulled the legislation. In a statement released moments ago, he said, “The House did not take up the tax measure today because it did not have sufficient support from our members to pass.” Boehner lost.
Plan A, which was a deal with Obama, was put on ice, many believe, because Boehner couldn’t wrangle the votes to pass anything Obama would sign. Plan B failed because Boehner couldn’t wrangle the Republican votes to pass something Obama had sworn he wouldn’t sign.
The failure of Plan B proved something important: Boehner doesn’t have enough Republican support to pass any bill that increases taxes — even one meant to block a larger tax increase — without a significant number of Democrats. The House has now adjourned until after Christmas, but it’s clear now what Plan C is going to have to be: Boehner is going to need to accept the simple reality that if he’s to be a successful speaker, he’s going to need to begin passing legislation with Democratic votes.
There’s an asterisk there, though: It’s not entirely clear whether Boehner will be the speaker of the House a month from today. The vote to elect the next speaker is on Jan. 3. To win, you need an absolute majority of the House, not a plurality. Even a hopeless conservative challenge that attracts only a handful of Republican votes could deny Boehner the speakership until a consensus candidate emerged. Tonight’s vote makes that challenge more likely.
A significant number of Boehner’s members clearly don’t trust his strategic instincts, they don’t feel personally bound to support him, they clearly disagree with his belief that tax rates must rise as part of a deal, and they, along with many other Republicans, must be humiliated after the shenanigans on the House floor this evening. Worse, they know that Boehner knows he’ll need Democratic support to get a budget deal done. That means “a cave,” at least from the perspective of the conservative bloc, is certain. That, too, will make a change of leadership appealing.
If a conservative spoiler runs, he or she could very possibly deny Boehner the 218 votes he needs to become speaker, clearing the way for a more moderate candidate like Eric Cantor to unite the party. It’s hard to say exactly how likely that is. But it’s likelier than it was, say, this morning.
By: Ezra Klein, The Washington Post, December 20, 2012
“Another Anti-Obamacare Headline”: Beware The Great Health Insurance Scam Of 2014
The anti-Obamacare world is atwitter over comments made last week by Aetna CEO, Mark Bertolini, who predicts that some insurance markets will “go up as much as much as 100 percent” when Obamacare takes hold in 2014—with the average increases running between 25 percent and 50 percent in the small group and individual segments of the business.
Mr. Bertolini has dubbed this phenomenon “premium shock”.
To be sure, this is a great headline for those who remain committed to defeating the Affordable Care Act with nothing better to suggest in its place. However, the facts reveal that Bertolini’s comments—while just maybe true for a very few participants buying coverage on the exchanges in the individual markets—are completely misleading with respect to the individual markets and likely completely untrue as applied to the small group market.
So, how is Mr. Bertolini arriving at his dire predictions?
Apparently, it’s all about (a) the new tax placed on health insurance company sales, (b) the community rating requirements that now prohibit older participants in a health insurance pool to be charged more than 3 times what is paid by younger members and (c) the new minimum standard of benefits that will need to be provided to those who purchase health coverage on the exchanges.
Pretty scary, yes?
The problem with Mr. Bertolini’s prediction is that it is completely and utterly at odds with not only the Congressional Budget Office (“CBO”) projections but with American Health Insurance Plans (AHIP) —the very lobbying organization that represents Aetna and was an active and hugely important supporter of Obamacare.
In 2009, the CBO projected that the Affordable Care Act will have little impact on small and large group policies. This is notable given the expectation that, by 2016, the small group market will represent 13 percent of the total insurance market while large groups will provide coverage for a full 70 percent of Americans with health insurance coverage. Do the math and you find that, according to the CBO, 83 percent of all covered Americans will experience little to no change in premium rates beyond normal increases that would occur had Obamacare never become the law of the land.
As for the individual markets, which will comprise 17 percent of the overall insurance market in 2016, premium rates are predicted to rise about 10 to 13 percent by 2016—considerably lower than the doubling Mr. Bertolini has suggested will take place in 2014.
What’s more, approximately half of those gaining coverage in the individual market will qualify for the government subsidies, thereby reducing the price of their insurance premiums below where they currently exist.
Of course, it is not uncommon for people to discount CBO projections and proclaim them to be biased when the projections fail to meet a desired political narrative.
So, let’s see what Aetna’s own trade association, AHIP, has to say.
A review of the AHIP website reveals that the sales tax imposed on the health insurance companies—and sure to be passed along to consumers—will account for a premium increase averaging 1.9 percent to 2.3 percent by 2014 and 2.8 percent to 3.7 percent by 2023.
Now, you may object to this potential increase—but it is a long way from the increases Mr. Bertolini is predicting.
On the subject of community rating—where insurance companies will now be prohibited from charging older participants in their health insurance pools as much as 10 times more than what they charge younger members even if the elder participants have no pre-existing health problems—AHIP indicates that limiting the rates for the older participants to only 3 times the rate charged the young will result in some younger insurance customers paying as much as 45 percent more in premium payments while older participants will pay 13 percent less.
No doubt, this is a large part of what Aetna’s Bertolini is relying on when trying to freak out the public.
The problem with Bertolini’s prediction is that even this large percentage increase, should it prove to be actuarially accurate, would not apply in the small and large group markets- it would apply only to a very limited number of people purchasing their health insurance on the exchanges who are (a) very young and (b) not qualified for subsidies.
The number is also misleading in its severity.
According to AHIP, the average premium paid by a 24 year old in the individual marketplace is $1200 a year. Using AHIP’s numbers, the price of making the cost of heath insurance more equitable for a 60 year old will potentially cost that 24 year old, on average, an extra $45 a month.
While I don’t mean to minimize this increase, as I recognize that every dollar counts when one is young and getting started, it is important to keep the actual price tag in perspective and weigh the equities when considering that those at the older age range have been overcharged for many years.
The reality is that the young have been paying unreasonably low premium rates for for a very long time—it being in the health insurance company’s profit interest to bring in as many young and healthy people as possible in the door by charging artificially low rates. The problem is that they make up for it by charging artificially high rates to the older people the insurance company would rather not have in the first place. What the ACA seeks to do is correct this situation so that 60 year olds are not precluded from gaining health insurance coverage by being priced out of the market.
Note that this problem could have been averted for younger Americans had we lowered the Medicare age to 55 however this was not acceptable to the Congressional GOP.
And that brings us to the topic of minimum benefits that must now be including in insurance policies offered on the health care exchanges, another area where large increases can be found in the effort to alarm the public.
According to AHIP, the additional costs attributable to health insurance companies actually having to provide a meaningful benefit ranges for as little as a tenth of a percentage point in Rhode Island to 33 percent in Maine where, apparently, health insurance policies do not provide much in the way of actual coverage. And, again, these numbers apply only to the individual marketplace on the exchange.
Thus, if you are one of the 8.5 percent of Americans who will be buying your coverage on the exchange in the state of Maine (making for a very, very tiny percentage) you may now have to pay more to actually get some health care coverage in exchange for what you pay.
So, what does all this tell us?
Gary Klaxon, Vice President of the Kaiser Family Foundation—one of the few health care think- tanks that just about everyone agrees is completely non-partisan and objective, had this to say about Mr. Bertolini’s predictions:
“That just seems silly. I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”
Silly, indeed.
There is, of course, more to this than what the anti-Obamacare folks are choosing to report.
That would be the part where Bertolini noted in his ‘premium shock’ comments that this huge, one-time jump in premium rates to be expected in 2014 also includes increases in costs that would come even without the health care reform law.
Translation—health insurance companies have been trying to raise rates at a ridiculous pace ever since the word ‘Obamacare’ first entered the American lexicon, always seeking to blame these increases on the law even before the law became the law. So, when 2014 arrives, you can be certain that they will do everything in their power to grab as large an increase as they can get away with in order to preserve their profits.
Mr. Bertolini is merely laying the groundwork for that effort as Obamacare has provided the health insurance industry with a wonderful scapegoat, perfectly suited and even more perfectly timed to cover the inescapable truth of health insurance—it is a business model whose time has passed.
The sooner the American public realizes that private health insurance companies no longer work, the sooner we can get busy with the solutions that, while politically uncomfortable, can actually solve the nation’s health care challenges.
In the meantime, if you are a part of a large or small business health insurance group, there is no reason to expect that there should be significant—if any— increases in your premium charges in 2014. If you are an individual who will be shopping for health insurance on the exchanges, the 50 percent of you that will qualify for subsidies should experience premium costs at a lower rate than what you are currently paying, If you are in that other half, you may, indeed, see some increase in your rate—but nowhere near the ‘doubling’ the insurance industry would like you to believe is in your future.
By: Rick Ungar, Op-Ed Contributor, Forbes, December 20, 2012
“Laying Out The Best Options”: The Progressive Case For The Chained Consumer Price Index
Liberals are going to have to decide if they’ll stick with the president if the plan he floated this week to cut Social Security benefits by switching to the so-called chained CPI becomes a reality, and it’s not an easy choice. Progressive pressure groups and lawmakers are furious with Obama for proposing the cuts, as I noted yesterday, but House Democratic Leader Nancy Pelosi said she’s confident that her caucus would ultimately support the plan if the president asks them too.
The case against moving to the chained CPI is easy to make: It represents a real cut to seniors’ Social Security benefits, which has so far been a non-starter. Even advocates of the switch acknowledge this. But since we may have to swallow it, it’s worth laying out the best progressive argument possible in favor of the chained CPI. We’re not saying it’s right, but it’s a case that should be made.
And the argument does exist. The Center for Budget and Policy Priorities, one of the most well-respected liberal think tanks on policy analysis, has endorsed the change. As has the Center for American Progress, Washington’s most powerful liberal think tank, which recommended the chained CPI in its comprehensive Social Security reform plan.
The key question is this: Do you believe Obama can get a deal without cutting anything from social safety entitlement programs, or is he going to have to do something? If you fall in the former camp, then the chained CPI is dead on arrival. But, if you think we’re going to have to cut entitlements at some point, then the chained CPI is probably the least bad option of a menu of bad possibilities, including raising the Medicare retirement age, which is the most likely alternative and would be far more harmful.
On its own, the chained CPI is unquestionably bad, but as part of a deal to raise taxes, extend unemployment benefits and do the other good things Obama wants to do, and if it includes major mitigating tweaks, it can be made almost palatable.
First of all, it’s important to note that the CPI formula doesn’t affect just Social Security. Rather, it appears in hundreds of different places on both the revenue and spending side of government. Almost every government retirement, disability and income-support program pays annual cost of living adjustments that are linked to the CPI. On the tax side, dozens of elements, from the standard deduction to limits on contributions to 401K plans to the earned income and child tax credits, are adjusted every year based on the CPI.
The whole point of the CPI is make sure benefits keep pace with inflation on the one hand, and to ensure that people are paying enough taxes as inflation changes on the other hand. So while the chained CPI cuts benefits, it also raises revenues in a way that’s palatable to Republicans. The change is estimated to save about $220 billion over 10 years, $72 billion of which would come from increased tax revenue.
Moreover, both CBPP and CAP, along with many independent economists, believe the chained CPI is a more accurate measure of inflation than the current index, called the CPI-W. The CPI is calculated by measuring price changes in a basket of 250 common consumer goods, but only the chained CPI takes into account that people shift their buying habits in response to price changes. Adjusting for that, the chained CPI grows about .3 percent slower than the current rate.
Liberals rightly note that this substitution effect isn’t really true for the very poor and very old, who spend a disproportionate amount of their income on non-substitutable goods like healthcare and housing. That’s why the only acceptable way to shift to the chained CPI is to include exemptions for some of the most vulnerable groups.
There are two major changes necessary. First, add a bump in benefits to the very old, who are more likely to have high healthcare bills and to have exhausted their savings that supplemented their Social Security income. Second, exempt Supplemental Security Income, which serves the poorest, disabled and blind but still often leaves people below the poverty line. SSI benefits should actually be increased, but that would require a different effort, so it should at the minimum be exempted from the CPI change.
Obama has indicated that he will demand these changes. The Simpson-Bowles and Rivlin-Domenici deficit reduction plans, which both included a move to the chained CPI, also included similar caveats. Nancy Pelosi said the changes would be included in a final deal: “The details of this are not all ironed out, but they all mitigate for helping the poorest and neediest in our society, whether they’re Supplemental Security Income recipients, whether they’re 80 and older or whether they’re truly needy in-between.”
With the changes, CBPP says, “we believe that the chained CPI is a reasonable component of a comprehensive package to put the budget on a sustainable course.”
But wait, aren’t there more progressive ways to change Social Security? Yes, but.
Dylan Matthews yesterday laid out three alternative ways to cut the plan that is far progressive in the economic sense and appealing to progressives in the political sense. Two of the plans are different ways to reduce benefits for the wealthy, while the third option would be to raise or eliminate the tax cap, which prevents any income over about $110,000 from being taxed. These plans would all save far more money than the chained CPI, and do it all by hurting only the rich, unlike the CPI change. Great, right?
There are two major political problems with either approach. The first is in the short term: Republicans will never support raising or eliminating the tax cap as it would be a huge tax increase. Even Democrats would have trouble embracing it, since it would mean raising taxes on people who make under $250,000 a year, whose taxes they’ve promised not to hike.
The second problem is in the long term. Social Security was designed to be not a welfare program but a social insurance program. You get out what you paid into it over many years of working, with only marginal changes to redistribute income downward. Making it a welfare program would undermine the programs long-term political strength.
This was a cornerstone of FDR’s vision for the plan. He had to defend the plan from attacks from the populist left, which called for more aggressive redistribution from general taxation. Some means testing may be possible without transforming the perception of the program into a welfare plan, but it’s a potentially dangerous precedent.
Perhaps the best argument against the chained CPI is that even if it is a more accurate measure of inflation, Congress should not cut benefits because it would be almost impossible to restore or raise them (which is probably what actually needs to happen) through a change in the benefit structure. This would require an enormous congressional fight and Republicans would almost surely kill it, so the current CPI should be preserved, the thinking goes. This is convincing. The only plausible response is a good government argument that the CPI should be used to calculate inflation, not monkey with benefits in a backdoor way.
To Paul Krugman, the plan put forward by Obama is barely acceptable, and anything more would be unacceptable, but he’s not convinced the chained CPI is an outright deal killer.
Since the chained CPI may become a reality, liberals should at least begin thinking critically about it, even if just to decide once again that it is unacceptable.
By: Alex Seitz-Wald, Salon, December 19, 2012
“A Transparent Public Relations Ploy”: Don’t Be Fooled, Walmart Hasn’t Changed Anything
In this week’s issue, we describe how Walmart has expanded gun sales—including military-style assault weapons—to half of its stores nationwide, and is the country’s biggest retailer of guns and ammunition in the country.
As our story was about to be published, Walmart removed a Bushmaster AR-15 style assault rifle, the same gun Adam Lanza used to carry out his attack on the Sandy Hook Elementary School, from its website. All of the other assault weapons remain. (See other examples here).
This is one of the most transparent public relations moves in relation to a dangerous product that I can recall—it was literally the least Walmart could do. To be clear, the store never actually sold the guns online. Rather, you can peruse Walmart’s gun inventory on its website, read customer reviews and product specifications and then find a Walmart near you that carries the item.
All Walmart did was remove that one gun, the one most likely to create a public relations problem, from a website where you couldn’t buy it anyway. But the Bushmaster remains on Walmart shelves—something the retail giant confirmed to MSNBC this afternoon, saying there is “no change” to its firearm sales.
Other retail chains, however, are making changes—though only slightly more substantial than Walmart’s URL adjustment. Dick’s Sporting Goods is “suspending” sales of some rifles in stores nationwide during “this time of national mourning,” and taking all guns out of stores located near Newtown, Connecticut. Cabela’s will stop selling AR-15s in Connecticut only.
If Walmart were to curtail weapons sales, however, it wouldn’t just hurt their bottom line. Freedom Group, one of the largest gun manufacturers in the country with $237.9 million in annual sales, said in its most recent financial statement that Walmart accounts for 13 percent of those sales alone, and warned investors of trouble should Walmart ever change its policy:
Our sales to Wal-Mart are generally not governed by a written long-term contract between the parties. In the event that Wal-Mart were to significantly reduce or terminate its purchases of firearms, ammunition and/or other products from us, our financial condition or results of operations and cash flows could be adversely affected.
Freedom Group was dumped today by its private equity owner, Cerberus Capital, following investor pressure. They’re in for more trouble if Walmart stops selling guns—but don’t look for that to happen anytime soon, based on how the retail giant has responded so far.
By: George Zornick, The Nation, December 18, 2012
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