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“Humming Along Today”: Despite Rocky Beginnings, 5 Other Government Programs Suggests Glitches Get Fixed And Forgotten

The Obama administration’s struggle with debugging the website is causing critics to ask whether ObamaCare is “Obama’s Iraq war,” and to dismiss Obama’s signature policy achievement a “quagmire.”

Media coverage is becoming increasingly hysterical, meaning some historical perspective is in order. Many large-scale government programs that are now embedded in American society also began with rough rollouts that are now mostly forgotten.

Here are five programs that are humming along today, despite their rocky beginnings:

1. Social Security
In the program’s early days, many employers failed to include worker names and their new Social Security numbers in their earnings report, leaving the government without the basic information needed to calculate benefits and cut checks. Syndicated columnist Drew Pearson turned the “John Doe” problem into a crusade, writing about the snafu once a week for two months and stoking panic that the government would be unable to pay out the promised benefits to millions. But new procedures were established to follow up with delinquent employers, and within a year the number of John Does was slashed. Today, the crisis is dismissed as a blip, while Social Security historians view the effort to build a nationwide social insurance system from scratch before the age of computers as “Herculean” and “amazing.”

2. Medicare
Last week, historian and Bloomberg columnist Stephen Mihm chronicled the myriad problems that beset the 1966 Medicare rollout. More than 700,000 eligible seniors initially refused to sign up because they mistakenly believed it meant giving up Social Security. Some Southern cities were left without any participating hospitals because the Medicare law required hospitals to comply with the new Civil Rights Act, yet many in the South remained segregated. It was more commonplace at the time for doctors to bill patients directly, and excessively long waits for Medicare reimbursement checks frustrated seniors. But as Mihm notes, “The government and the private insurers worked out most of the kinks, and by the late 1960s the system was working reasonably well.”

3. Medicare’s Prescription Drug Benefit
It wasn’t all that long ago that another presidential health care initiative ran into an online buzzsaw. In 2005, the Bush administration rolled out its new Medicare Part D program, providing seniors coverage for prescription drugs. But the debut was bedeviled by website problems. The Washington Post noted at the time that the launch was delayed twice over the course of a month. Then on the day it actually launched, “Visitors to the site could not access it for most of the first two hours. When it finally did come up around 5 p.m., it operated awfully slowly.” The glitches continued throughout the open enrollment period, but as Jack Hoadley of the Georgetown Health Policy Institute reminded in a blog post this month, “The program added both phone lines and customer service representatives and implemented other upgrades over the weeks. The website — both its functionality and the accuracy of its information — was the source of ongoing frustration for its users, but it did get better over time. By the end of open enrollment in May 2006, over 16 million successfully enrolled for drug benefits in Part D … And today, Part D enjoys widespread popularity.”

4. The Peace Corps
President John F. Kennedy established the Peace Corps by executive order shortly after taking office in 1961. Skeptics worried that the program would be overrun with immature draft-dodgers. And that concern was seemingly confirmed when one of the first volunteers mistakenly dropped a postcard before it could be mailed, telling her stateside boyfriend that her host country of Nigeria suffered from widespread “squalor and absolutely primitive living conditions.” A horrified Nigerian student discovered the postcard, made copies, and distributed it widely. It sparked an international incident. Riots ensued, and the volunteer had to be sent home “cloak and dagger” for her safety. Still Kennedy forged ahead, shrugging off the setback by joking to a new batch of volunteers, “Keep in touch, but not by postcard!” And two years later, the Christian Science Monitor reported that foreign governments were “so pleased with [the Peace Corps’] work they have called again and again for more … Although the ‘postcard incident’ in Nigeria seemed to confirm some fears that the program might do more harm than good, that has been far from the case…”

5. The income tax
It was 100 years ago this month when President Woodrow Wilson first enacted the progressive income tax that finances much of our government today. Now, few Americans would claim to be fans of our current tax system — but many of them are fans of what the income tax system helps pay for. In the early days of the rollout, however, plenty of people were sent over the edge because of the forms’ perceived complexity. As tax historian Joseph Thorndike noted, one lawyer made headlines in 1915 by saying of the forms, “It is so complicated that it is utterly impossible to understand its meaning save by consulting a palmist.”A 1915 The New York Times headline characterized the forms as “Income Tax Riddles.”

Now, some may say the tax forms have only gotten worse over the last 100 years. But by and large, the public has accepted the nature of tax forms as a governing necessity, and no politician has gotten very far in the past century campaigning against the progressive income tax. As Thorndike noted in Barron’s, “The income tax has survived because it does two things reasonably well: It raises money, and it satisfies popular notions of economic fairness.”

The lesson? History suggests that glitches get fixed and forgotten, people get acclimated to new programs, and policies rise and fall on their merits. If past is prologue, ObamaCare will be judged on the quality of the coverage, not on the first incarnation of the website.


By: Bill Scher, The Week, October 23, 2013

October 24, 2013 Posted by | Affordable Care Act, Federal Government, Obamacare | , , , , , , | Leave a comment

“Our Nation’s Biggest Shame”: How Much Money Would It Take To Eliminate Poverty In America?

Last week, the Census Bureau put out its annual income and poverty figures for 2012. The big news on the poverty front is that the percentage of Americans living in poverty is unchanged at 15 percent, which amounts to 46.5 million Americans. More than one in five kids under the age of 18 are in poverty, and nearly one in four kids under the age of six are impoverished as well. These are numbers we’ve all become accustomed to, but they can still shock the conscience if you make an effort to let them soak in again.

The sheer scale of poverty in the U.S. is so massive that it can seem as if eliminating or dramatically reducing it would be nearly impossible. After all, 46 million people is a lot of people. But in reality, if we stick to the official poverty line, the amount of money standing in the way of poverty eradication is much lower than people realize.

In its annual poverty report, the Census Bureau includes a table that few take note of which actually details by how much families are below the poverty line. A little multiplication and addition later, and the magic number pops out. In 2012, the number was $175.3 billion. That is how many dollars it would take to bring every person in the United States up to the poverty line. In 2012, that number was just 1.08 percent of the nation’s gross domestic product (GDP), which is to say the overall size of the economy.

To be sure, you probably don’t want to run a program that hunts out every family below the poverty line and brings them right up to it. Such a program would effectively involve imposing a 100 percent marginal tax rate for all income made below the poverty line. But, things like strategically expanding the Child Tax Credit, the Earned Income Tax Credit, SNAP, and related programs could make enormous strides toward poverty reduction. Implementing a mild basic income and a negative income tax would also help a great deal. The policy solutions for dramatically cutting poverty exist, they are used by countries elsewhere, and they could be used here, if we chose to do so.

It might be helpful to put the $175.3 billion magic number in perspective. In 2012, this number was just one-fourth of the $700 billion the federal government spent on the military. When you start hunting through the submerged spending we do through the tax code, it takes you no time to find enough tax expenditures geared toward the affluent to get to that number as well. The utterly ridiculous tax expenditures directed toward the disproportionately affluent class of people called homeowners—mortgage interest deduction, property tax deduction, exclusion of capital gains on residences—by themselves sum to $115.3 billion in 2012. Throw in the $117.3 billion in tax expenditures used to subsidize employer-based health care (also a disproportionate sop to the rich), and you’ve already eclipsed the magic number.

Eradicating or dramatically cutting poverty is not the deeply complicated intractable problem people make it out to be. The dollars we are talking about are minuscule up against the size of our economy. We have poverty because we choose to have it. We choose to design our distributive institutions in ways that generate poverty when we could design them in ways that don’t. Its continued existence is totally indefensible and our nation’s biggest shame.


By: Matt Bruenig, The American Prospect, September 24, 2013

September 26, 2013 Posted by | Politics, Poverty | , , , , , , , | Leave a comment

“The First Progressive Revolution”: It Did Happen And It Will Happen Again

Exactly a century ago, on February 3, 1913, the Sixteenth Amendment to the Constitution was ratified, authorizing a federal income tax. Congress turned it into a graduated tax, based on “capacity to pay.”

It was among the signal victories of the progressive movement—the first constitutional amendment in 40 years (the first 10 had been included in the Bill of Rights, the 11th and 12th in 1789 and 1804, and three others in consequence of the Civil War), reflecting a great political transformation in America.

The 1880s and 1890s had been the Gilded Age, the time of robber barons, when a small number controlled almost all the nation’s wealth as well as our democracy, when poverty had risen to record levels, and when it looked as though the country was destined to become a moneyed aristocracy.

But almost without warning, progressives reversed the tide. Teddy Roosevelt became president in 1901, pledging to break up the giant trusts and end the reign of the “malefactors of great wealth.” Laws were enacted protecting the public from impure foods and drugs, and from corrupt legislators.

By 1909 Democrats and progressive Republicans had swept many state elections, subsequently establishing the 40-hour work week and other reforms that would later be the foundation stones for the New Deal. Woodrow Wilson won the 1912 presidential election.

A progressive backlash against concentrated wealth and power occurred a century ago in America. In the 1880s and 1890s such a movement seemed improbable, if not impossible. Only idealists and dreamers thought the nation had the political will to reform itself, let alone enact a constitutional amendment of such importance—analogous, today, to an amendment reversing Citizens United v. FEC and limiting the flow of big money into politics.

But it did happen. And it will happen again.


By: Robert Reich, The American Prospect, February 3, 2013

February 4, 2013 Posted by | Economic Inequality, Income Gap | , , , , , , , | Leave a comment

“Talk Of Refusing To Raise The Debt Limit Is Just That—Talk”

The debt limit is the maximum amount of debt the federal government can legally issue at a point in time. The current limit will be reached in the next few months, prompting discussion over whether Congress should raise the limit. As with so many deliberations in Washington, though, the popular discussion on this topic is shrouded in confusion and ignorance, and masks the real issues.

 The underlying issue is simple: If you spend your income on things you want, and the charges then show up the following month on your credit card bill, would you pay those charges? Yes, of course you would. You’ve made purchases and the bill has come due.

That’s the whole question about raising the debt limit—whether Congress should allow the government to pay for spending that has already been approved by Congress. (Remember, it is Congress that authorizes all federal spending.) The answer, of course, is yes.

Now, as you’re paying your credit card bill, you may well conclude that you are spending too much or that you need to earn more income to pay for your current standard of living. But that would be a separate issue, and stiffing the people who supplied the goods you just bought not only wouldn’t resolve that problem, it would in fact make solving it harder, because your credit rating might fall if you don’t pay what you already owe.

Likewise, the separate problem for the U.S. government is how to deal with our dismal fiscal future. The nation needs to resolve the looming fiscal imbalance through spending cuts and tax increases. Not paying the bills we already owe—that is, not raising the debt limit—not only won’t solve the real problem, it would actually make a solution more difficult by undercutting the government’s creditworthiness.

In short, raising the debt limit has nothing to do with controlling future spending or with raising the taxes necessary to pay for future spending. It is just a matter of paying bills that we’ve already incurred.

Raising the debt limit is a completely ordinary event. The limit has been raised 74 times in the last 50 years and 10 times in the last 10. Debt limit increases are associated with both Republicans and Democrats. When federal debt approaches the limit, the president typically favors raising the limit and the other political party demagogues the move. That is exactly what is happening right now.

Talk of refusing to raise the debt limit is just that—talk. Not raising the limit would require Congress to annually find about $1.3 trillion in federal tax increases or spending cuts—a set of policy changes larger than the revenues currently raised by the individual income tax. So far, the legislators who say they oppose a debt limit increase have not come forth with anything near such a plan. Nor should you expect them to. They are just blowing smoke. Eventually, they will agree to raise the limit.

While voters and members of Congress may find it cathartic to channel their outrage and frustration at the underlying budget situation onto the current debt limit discussion, the real question is how to adjust future spending and taxes to bring about future fiscal stability and sanity. The sooner we get to that discussion, the better.

Refusing to raise the debt limit not only would not help solve that problem, it would actually make a solution much harder to achieve.

By: William Gale, Senior Fellow, The Brookings Institute, U. S. News and World Report, March 28, 2011

March 29, 2011 Posted by | Congress, Debt Crisis, Deficits, Economy, Federal Budget, Politics, Voters | , , , , , , , | Leave a comment

Tax Hike Prevention Act of 2010: How It Affects You

Now that President Obama has signed the Tax Hike Prevention Act of 2010, taxpayers will have some certainty about their tax situation, if only for the next 24 months.

The new law contains a bevy of tax breaks — new and extended — and emergency help for the jobless. Its cost over 10 years is estimated at $858 billion.

Here’s a rundown of some of the biggest ticket items that will affect individuals. (Except where noted, all provisions are for 2011 and 2012).

Extended income tax rates: $207.5 billion. The six federal income tax rates will remain at the same levels they are today: 10%, 15%, 25%, 28%, 33% and 35%. In addition, itemized deductions will continue to be allowed in full for high-income taxpayers.

AMT fix: $147 billion. More than 20 million tax filers will be protected from having to pay the so-called “wealth tax,” otherwise known as the Alternative Minimum Tax. For tax year 2010, the bill will raise the amount of income that is exempt from the reach of the AMT to $47,450 for individuals and to $72,450 for couples filing jointly. In 2011, those exemption amounts will increase to $48,450 and $74,450 respectively. In addition, the bill will allow taxpayers to apply nonrefundable credits (which reduce one’s tax bill dollar for dollar) to their tax liability — whether under the AMT or the regular tax code.

Social Security tax break: $112 billion. Workers will get a 2 percentage-point break on their payroll tax for one year. Instead of paying 6.2% on wages up to $106,800, they will only have to pay 4.2% in 2011. This tax break replaces the Making Work Pay credit, which expires this year. Unlike Making Work Pay, which was limited to workers making less than $75,000 ($150,000 for couples), the payroll tax holiday will be available to everyone who pays into Social Security.

Expanded child tax credit: $90 billion. The bill will retain the $1,000 child tax credit (up from $500 before the Bush tax cuts). It also will retain the reduced-earnings threshold, which allows more people to claim the credit as refundable. A refundable tax credit is one paid to a tax filer even if the value of the credit exceeds his tax liability. So if a filer doesn’t owe any federal income tax but qualifies for the credit, it is paid to him in the form of a refund.

Smaller estate tax: $68 billion. Barring any changes, the estate tax in 2011 and 2012 will be reinstated at an exemption level of $1 million and a top rate of 55%. But under the bill, the exemption level will be raised to $5 million and the top rate lowered to 35%. The legislation will also reinstate the so-called “step up in basis” for beneficiaries of those who die in 2010, 2011 or 2012. A stepped-up basis means that when someone sells an inherited asset, his capital gains tax bill will be based on the asset’s price the day he inherited it, rather than when the decedent originally bought it. Practically speaking that means the beneficiaries of those who died in 2010 will be allowed to choose which estate tax rules to follow — those of 2011 or those of 2010. Under 2010 rules, there is no estate tax but also no step-up rules; there is only an option to exempt $1.3 million worth of capital gains from tax.

Help for the jobless: $57 billion. The unemployed will get a 13-month extension of the deadline to file for additional unemployment benefits — which go as high as 99 weeks in states hit hardest by job loss.

Extended investment tax rates: $53 billion. Everybody will get to keep their low investment tax rates for the next two years. For most people, that means their qualified capital gains and dividends will continue to be taxed at 15%. Low-income tax filers (those in the 10% and 15% brackets), however, will continue to enjoy a 0% tax rate on their capital gains or dividends.

Marriage penalty relief: $27 billion. Marriage will still be hard (sorry), but not because less-than-wealthy two-earner couples will owe more to the IRS than they did when they were single. The bill continues to ensure that the standard deduction for couples is exactly twice that for single filers. It also maintains an expanded 15% tax bracket so that the amount of income in that bracket for joint filers is exactly double that for single filers.

Expanded college credit: $18 billion. Paying for college tuition in 2011 and 2012 will be made a bit easier with the retention of the American Opportunity tax credit, which is an expansion of the HOPE tax credit. The Opportunity credit is worth up to $2,500 (up to 100% of the first $2,000 spent and up to 25% of the next $2,500), and it may be claimed for four years’ worth of college. Eligibility to take the credit is limited to those with modified adjusted gross income below $90,000 ($180,000 for couples filing jointly).

Individual tax break extensions: Costs vary. The legislation will extend a number of tax breaks that have been introduced in the past few years such as the option to deduct on one’s federal return state and local sales tax instead of state and local income tax — at a cost of $6 billion. Also, it will extend a deduction for qualified tuition and other education-related expenses at a cost of $1.2 billion. Less pricey extensions include a break for teachers to deduct up to $250 in classroom expenses (just under $400 million).

By: Jeanne Sahadi, Senior, December 17, 2010

December 17, 2010 Posted by | Tax Hike Prevention Act 2010 | , , , , , , , , , , , , , , , | Leave a comment


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