Daily Digest - November 5: Home Is Where The Affordable Rent Is

Nov 5, 2013Rachel Goldfarb

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Where Millennials Can Make It Now (Atlantic Cities)

Click here to receive the Daily Digest via email.

Where Millennials Can Make It Now (Atlantic Cities)

Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz introduces her two-week series on cities where Millennials afford the costs of achieving their goals. The first piece, on Omaha, points out the higher levels of risk Millennials can take on with low costs of living.

Median Wage Falls to Lowest Level Since 1998 (AJAM)

David Cay Johnston reports that as the median wage falls, average wages are rising, according to new data from the Social Security Administration. That's a sign of gains at the top of the income ladder, with the wealthiest Americans pulling up the average.

How Washington Abandoned America's Unpaid Interns (The Atlantic)

Stephen Lurie explains the legal puzzle that has left unpaid interns without protections. There's serious structural damage happening to the workplace when young people work unpaid and unprotected, but that can't be fixed without laws or regulations.

Where’s the GOP’s Anti-Poverty Agenda? (WaPo)

Ryan Cooper asks why the Republicans have ignored the section of their autopsy report about poverty. A hard line against poverty assistance programs is particularly horrifying when unemployment is still high, and the GOP knows it, but apparently doesn't care.

2014 Cuts Hit Defense Spending, so Obama Has Leverage on Taxes (MSNBC)

Timothy Noah suggests that since the next round of sequestration cuts hit the Pentagon, the Democrats have a lot more budget clout than they think. Republicans don't want to be tied to defense cuts, which makes these cuts a useful negotiation tool.

If the GOP Repeals Obamacare, 137 Million Americans Could Get Cancellation Notices (MoJo)

Erika Eichelberger thinks that the Republicans would face public outrage if they actually managed to repeal the Affordable Care Act. The people getting cancellation notices from their insurance companies today are big news, but a repeal would be exponentially larger.

Meet Preet Bharara, Who Just Won the Biggest Insider Trading Case Ever (WaPo)

Lydia DePillis profiles the U.S. Attorney for the Southern District of New York. His crusade against a culture of corruption on Wall Street led to a major victory in a criminal case against a hedge fund for insider trading yesterday.

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Daily Digest - October 31: Low Taxes Carry Heavy Burdens

Oct 31, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

The Great American Ripoff: The High Cost of Low Taxes (Bill Moyers)

Click here to receive the Daily Digest via email.

The Great American Ripoff: The High Cost of Low Taxes (Bill Moyers)

Joshua Holland argues that low taxes in the United States translate to hugely disproportionate out-of-pocket costs for things that would be covered by the social safety net in other countries. That also means there's nothing to catch people in crisis.

End Corporate Welfare for McDonald's. Better Yet, Raise the Minimum Wage (The Guardian)

Sadhbh Walshe looks at the latest story about McDonald's workers seeking public assistance, which revolves around a phone call to its McResource line. She argues that if McDonald's needs to refer their workers to Medicaid and SNAP, they should be paying better wages.

Another Temporary Funding Bill? (MSNBC)

Jane C. Timm reports that a grand bargain is pretty much out of the question, and at least one Senator thinks that a continuing resolution through the end of the fiscal year is likely. That would bring us to a month before the 2014 elections, which would be rough timing for a budget fight.

C.F.T.C. Approves Tighter Commodity Trading Rules (NYT)

Alexandra Stevenson reports on new rules from the Commodity Futures Trading Commission, designed to protect client money from brokerage firms going bust. After a 2011 case that left customers $1.6 billion short, the need for these rules is pretty clear.

Paypal to Government: Be More Like Us (WaPo)

Lydia DePillis examines a report from Paypal that suggests how government should handle the mobile payment industry. The company calls on regulators to throw out their old methodology, which she thinks is hugely unlikely.

The New Futurism (The New Yorker)

James Surowiecki looks at human-capital contracts, which allow people to raise funds for businesses or education in exchange for a percentage of future earnings over a number of years. The principle is similar to income-based repayment on student loans.

New on Next New Deal

Maine's Lobster Industry is Dying, But Government Can Help Save It

Roosevelt Institute | Campus Network student John Tranfaglia calls for government intervention in Maine's lobster industry. Instead of criticizing the Canadian government for subsidizing lobster processing, Governor LePage should figure out ways to attract lobster processors to Maine.

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Maine's Lobster Industry is Dying, But Government Can Help Save It

Oct 30, 2013John Tranfaglia

U.S. lobstermen aren't netting the profits they deserve thanks to trade arrangements with Canada.

U.S. lobstermen aren't netting the profits they deserve thanks to trade arrangements with Canada.

It is not very often that the New York Times decides to pen an article about the Maine lobster industry. So when a Canada correspondent based in Ottawa and a New England correspondent based in Boston write two different articles in a span of three days which both appear in the New York edition, it might be smart for Mainers to listen up. All evidence suggests that despite high demand for Maine lobster, the state’s defining industry will continue to die off without greater government support and investment.

Ian Austen, the Canada correspondent who authored the article “Hit by Low Prices, Lobstermen are at Odds in Maine and Canada” describes many of the uncomfortable truths surrounding the industry. The yearly haul of lobster continues to increase while lobstermen are receiving less for their catches. Every year Maine’s iconic business is reminded that the rising costs of fuel and bait and the stagnant or even decreasing price of lobster is unsustainable.

In looking at the issue of oversupply, Austen discusses the newly increased state lobster promotion fund. The fund, which saw its budget go from $400,000 to $2.4 million, is as contentious as it is necessary. In May, I wrote a piece for the Portland Press Herald describing why I believe the fund is essential to putting more money back in hands of the lobstermen. But the marketing funds may not be effective if the lobster is shipped to Canada for processing. Trade rules state that once this transaction has occurred, the lobster is considered a “product of Canada.” That doesn’t bode well for Maine, since 50-70 percent of the lobster caught off its coast (which amounted to 123.3 million pounds in 2012) will be sent to Canada.

Two days later, Jess Bidgood, who is based in Boston, authored “Some Wary as Lobstermen Unite.” The article addresses the division between the established Maine Lobstermen’s Association and the newly formed Maine Lobstermen’s Union. At issue is whether unionization is the right step for lobstermen to take in response to severely decreasing profits. As the article discusses, the 5,000 or so licensed lobstermen in the state operate as independent business owners, not the traditional laborers who historically have combined to join unions, and the the Maine Lobstermen’s Association has made it clear that it does not believe unionization is the right solution to the problem. But it is clear that there is a problem, and it isn't going away on its own.

The underlying issue behind both these articles is that the loss of profits for lobstermen is something that never should have happened. For years, Maine has been overly reliant on its Canadian neighbors to handle its processing needs, and for years we have seen price markups that have increased dealers’ profits while shrinking those of the lobstermen (why else would food trucks in D.C. be charging $18 or a lobster roll?). What might be most striking is that the lobster does indeed come from Maine and there is an overwhelming demand for it. The issue, and what I believe the state legislature should be focused on, is that lobstermen are being paid less than $2 a pound when they should be getting more.

Maine's Republican governor, Paul LePage, is quick to criticize Canada for subsidizing its processing plants. Here’s a wakeup call to the governor: that how governments and businesses interact. States provide tax breaks, subsidies, and other economic incentives to attract businesses. So instead of removing murals, fighting over the “state treat,” disagreeing over the presence of a television monitor in the state house, and all the other petty disputes the legislature and governor have had over the last few years, the state should pursue a progressive approach to supporting its core industry. And while the state is reforming its approach, the federal government should also take note of how industries can suffer when the parties bicker with one another instead of pursuing real solutions.

John Tranfaglia is a senior majoring in political science at American University and a member of the Roosevelt Institute | Campus Network.

 

Man holding lobsters banner image via Shutterstock.com

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Daily Digest - October 29: Remember When the GOP Supported Family Planning?

Oct 29, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

Richard Nixon Knew Family Planning Saves Taxpayer Dollars, But Today’s GOP Doesn’t Care (Next New Deal)

Click here to receive the Daily Digest via email.

Richard Nixon Knew Family Planning Saves Taxpayer Dollars, But Today’s GOP Doesn’t Care (Next New Deal)

Roosevelt Institute Fellow Andrea Flynn argues that Title X funding needs to be increased, because demand for family planning services will go up as more people get health insurance. Unfortunately, the GOP has forgotten that this program is fiscally effective.

  • Roosevelt Take: Read Andrea's new white paper, "The Title X Factor: Why the Health of America's Women Depends on More Funding for Family Planning," here.

Here’s how GOP Obamacare Hypocrisy Backfires (Salon)

Michael Lind draws on a recent piece by Roosevelt Institute Fellow Mike Konczal to discuss the right's plans for the social safety net. If means testing and privatization become part of Social Security and Medicare too, he thinks we're in for some ineffective changes.

  • Roosevelt Take: Mike's piece argues that the struggles of Healthcare.Gov are proof that old-school New Deal-style liberal programs eliminate many potential administrative problems.

Ohio Governor Defies G.O.P. With Defense of Social Safety Net (NYT)

Trip Gabriel reports on Gov. John R. Kaisch's critique of his own party's "war on the poor." The governor worked around the GOP-led legislature to accept the Medicaid expansion, because he knows it will help his neediest citizens.

Food Stamps Will Get Cut by $5 billion This Week — and More Cuts Could Follow (WaPo)

Brad Plumer reports that an automatic cut is going to hit SNAP funding on November 1 with the end of a 2009 stimulus bill boost. Between that cut and current negotiations over SNAP, some Americans will be struggling with how to buy groceries and feed their families.

How Sequestration Gets Even Worse Next Year (ThinkProgress)

Bryce Covert reminds us that the automatic cuts of sequestration get even larger in 2014. With a lot of the accounting tricks that were used to soften the blow this year gone, sequestration part two will hit hard, and it won't be good for the economy.

Why Do Women Do Market Work? (TAP)

Matt Bruenig responds to a recent rant from Gavin McInnes of Vice against working women, bringing up the data that proves why women work. It turns out that in husband-wife families where both work, 54 percent would be in or near poverty without her income.

Yes, There’s a Budget Deal in the Works. Here’s What It Will Look Like (NY Mag)

Jonathan Chait says that a small budget deal is in the works, which will replace sequestration cuts with something more livable for everyone. He thinks there will still be some revenue increases, but they won't be tax rate increases.

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Richard Nixon Knew Family Planning Saves Taxpayer Dollars, But Today’s GOP Doesn’t Care

Oct 28, 2013Andrea Flynn

As the Affordable Care Act helps more Americans get health insurance, it's time to increase funding for Title X, because the need for family planning services is only going up.

As the Affordable Care Act helps more Americans get health insurance, it's time to increase funding for Title X, because the need for family planning services is only going up.

For more than 40 years, Title X has provided family planning and reproductive health services to millions of American women. More recently, conservative lawmakers have targeted Title X as part of their obsession with shrinking the social safety net and restricting access to women’s health care. Those same opponents are now likely to argue that the Affordable Care Act’s (ACA) focus on women’s health renders Title X unnecessary.  But as I argue in my new paper published by the Roosevelt Institute, that is simply not the case. In reality, the success of the ACA and the health of women across the country are dependent on even greater support for existing family planning programs.

Title X is the nation’s only program solely dedicated to family planning. It was passed into law in 1970 with overwhelming bipartisan support and can in fact be credited to two Republican presidents: Richard Nixon, who signed the bill into law, and then-Congressman George H.W. Bush, who led the legislative effort. It provides critical medical care to low-income, immigrant, and young women and enables clinics to pay for and maintain facilities, train and hire staff, and purchase equipment and supplies.

Despite being perennially underfunded, the program delivers incredible health results. Last year it served 4.76 million women, preventing an estimated 996,000 unintended pregnancies, 200,000 of which were among teens. Research has shown that services provided at Title X clinics save federal and state governments more than $3 billion every year.

As millions of Americans gain health coverage for the first time thanks to the ACA, clinics funded by Title X will become an even more critical building block of our nation's health system. Even when individuals obtain coverage, many will continue to choose publicly funded clinics as their main source of care. In the four years following the implementation of Massachusetts’ health care reform, which served as the model for the ACA, publicly funded health centers experienced a 31 percent increase in patients, even though the number of uninsured visiting those facilities fell by more than 15 percent.

Even women who are already fully insured will continue to rely on Title X clinics for family planning because they can do so in complete confidence. Issues like intimate partner violence and religious beliefs of employers, family, and partners, cause many women to circumvent their insurance plans when accessing family planning services and instead rely on public providers.

The fact is, despite the GOP’s relentless strategic misinformation campaigns and the technology problems that bedeviled the rollout this month, the ACA is good for women. It mandates that insurance plans fully cover all methods of contraception, prohibits gender discrimination and denial of care based on pre-existing conditions, and enables young people to stay on their parent’s plans until they are 26. It requires plans to cover pap tests, STD screening, preconception and prenatal care visits, postpartum counseling and breastfeeding support, and one well visit a year. Make no mistake: this is groundbreaking.

Despite these historic advancements, many women will remain uninsured in the years to come. There are lots of reasons for this, not the least of which is the refusal of many states to accept federal funding for the expansion of Medicaid.  

The ACA was intended to be a path to health care for all Americans, and a major pillar of the law was the expansion of Medicaid to all individuals who fall below 138 percent of the federal poverty level ($15,415 for an individual or $26,344 for a family of three), with subsidies for individuals above that level to buy insurance in the marketplaces. But last year the Supreme Court ruled that the federal government could not constitutionally require states to expand Medicaid, and conservative lawmakers pounced on the opportunity to block a major component of the ACA.

Today, 22 states refuse to expand Medicaid even though the federal government will foot 100 percent of the bill for the first three years and cover at least 90 percent of the cost after that. These states are denying care to more than 3.5 million low-income women who badly need it. The New York Times reported that as a result, two-thirds of poor black and single mothers and more than half of uninsured, low-wage workers will remain without coverage.

Basically, women who fall into the coverage gap are not considered poor enough for Medicaid by their states, but because the ACA originally intended for them to be covered by the expansion, they also don't qualify for subsidies. And even if they did, the cost of subsidized insurance would likely still be prohibitive given their income level. These individuals will have no choice but to rely on the social safety net – in this case, Title X-funded clinics – for care.

The very critics who have staked their political careers on sinking the ACA and preventing scores of women from accessing family planning services – and who shut down the government in an attempt to do so – would love nothing more than to do away with Title X. They have tried unsuccessfully in recent years, and the program will certainly be in their crosshairs as they continue to chip away at the host of social programs on which low-income women rely.

The ACA, while an enormous advancement for women’s health, does not eliminate the need for the Title X program. Rather, Title X will maximize the impact and reach of the ACA and ensure quality care for those who will remain uninsured.

In the forthcoming budget battles, women’s health advocates will have to fight tooth and nail to maintain Title X’s current funding level, which has already been diminished by sequestration. The program is as critical today as it was when it was created. Today’s very different breed of GOP lawmakers could use a reminder that it was their own party four decades ago that realized investing in family planning was a critical way to improve the health of women, communities, and the entire nation. Who ever thought we’d be longing for Nixon? 

Read Andrea's paper, "The Title X Factor: Why the Health of America's Women Depends on More Funding for Family Planning," here.

Andrea Flynn is a Fellow at the Roosevelt Institute. She researches and writes about access to reproductive health care in the United States. You can follow her on Twitter @dreaflynn.

 

Woman with pregnancy test banner image via Shutterstock.com

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Larry Klein's Lesson for the Single-Minded Economists Who Rejected Keynes

Oct 23, 2013Jeff Madrick

The late Nobel laureate knew that fiscal and monetary policy worked best together, and that low inflation alone would not sustain a strong economy.

The late Nobel laureate knew that fiscal and monetary policy worked best together, and that low inflation alone would not sustain a strong economy.

Larry Klein, a 1980 Nobel Prize winner in economics, died on Sunday. I interviewed him often when I was an economics reporter, and one of his most vehement beliefs had long stuck in my mind. He was an early Keynesian and built models to simulate the economy that could have predictive power. Because, like Keynes, he believed in the power of aggregate demand to drive the economy, he forecast that there would be no post-World War II Depression because of pent-up demand and the buying power of returning soldiers.

What stuck in my mind was Klein’s anger about evolving government policy. Even Keynesian economists had come to believe that monetary policy was more effective than Keynes’s fiscal policies. Klein argued to me that these stimulus policies only worked well in tandem. You need both monetary loosening, meaning mostly lower interest rates, and fiscal stimulus, meaning government spending or tax cuts, to restore strong economic growth.

The economic consensus did not take this lesson seriously. Most economists were pretty certain across much of the political spectrum that they had already learned how to manage the economy, and it wasn’t Klein’s way. Both Robert Lucas, the rational expectationist, and Olivier Blanchard, who leaned a bit towards Keynes, said with no small trace of hubris that macroeconomists had pretty much solved the big problem. Ben Bernanke also expressed confidence that the profession had at last learned the job.

There were some disagreements between the Lucas school of thought and economists like Blanchard. What they agreed on was that fiscal policies a la Keynes were not needed. Consumers and business would expect a rise in taxes if the federal government ran deficits, and so would save rather than spend, countering any stimulus. This phenomenon is known as Ricardian equivalence. At best, fiscal policy was politically clumsy, requiring Congressional approval for spending and all that.

In a 2010 publication called Rethinking Macroeconomic Policy, written with colleagues for the International Monetary Fund, where he is still chief economist, Blanchard admitted economists had been wrong. It took the housing and financial crash of 2007-2008 and the Great Recession to bring some sense to the profession. Blanchard and his co-authors wrote that what economists thought they knew was wrong. Economists had believed there was a single policy objective for controlling the economy, which was stable inflation, and there was also only a single tool, the interest rate. The 2010 piece was a mea culpa.

What lulled economists into complacency was what many now call the Great Moderation, an economy that was not too hot and not too cold. The way to get to this ideal state was merely to use monetary policies to stabilize inflation, preferably at low levels. It was the justification for what came to be called inflation targeting, either the hard kind with a precise target or the soft kind that was discretionary. Economists noted that the result of these policies since the early 1980s was both less volatile inflation and less volatile output (basically, GDP).

That was it. The major assumption was that stable GDP would push the economy to its optimal rate of growth, or in Blanchard’s more technical terms, “So long as inflation was stable, the output gap was likely to be small and stable and monetary policy did its job.”

But fiscal policy was decidedly secondary. And there is no mention of maximizing employment at all in the Blanchard piece; it wasn’t a thought in a mainstream economist’s mind, apparently. It was believed that the economy operated so efficiently with low, stable inflation that unemployment would automatically settle at its lowest, non-inflationary rate. Moreover, there was no serious discussion of growth, even though economic growth in the U.S. was not especially fast in these years. Here, then, was the general equilibrium model, a central assumption in economics and policymaking, simply taken for granted as true.

One other sentence in Blanchard is worth quoting: “[W]e thought of financial regulation as mostly outside the macroeconomic policy framework.”

Speculative bubbles, these economists believed, should not be deflated by regulators. The mess could easily be cleaned up later.

Macroeconomists were wrong not only about regulations and bubbles, admit Blanchard and his colleagues, but also about placing fiscal stimulus in the back seat. 

It’s by no means clear that macroeconomists have cleaned up their act. They still think low inflation will get us to maximum employment, for example. But at least they are now entertaining more objectives than one.

Their bad theory led us to sequestration today. There is too much water under the bridge for economists who correctly recommend fiscal stimulus to easily win the day when so many argued for so long that Keynesianism did not work. This is why Larry Klein was deeply frustrated.

America’s version of austerity economics is still winning the day, despite recantations like Blanchard’s. In coming months an agreement to cut the deficit over the next 10 years will be discussed, or apparently reckless Republicans will close the government down again. Medicare and Social Security cuts will be on the table. There is absolutely no economic need for this. The deficit is under control, and so is federal debt.

But the misleading macroeconomics practiced by America’s most prestigious university professors has left a long and damaging shadow. Klein would have shed some light.

Jeff Madrick is a Senior Fellow at the Roosevelt Institute and Director of the Bernard L. Schwartz Rediscovering Government Initiative.

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What Kind of Problem is the ACA Rollout for Liberalism?

Oct 23, 2013Mike Konczal

“This massive IT launch sure came in on time, under budget, and without headaches” is a statement that nobody has ever said. But even controlling for that, Healthcare.gov looks to be having a disastrous launch.

People are naturally asking about the practical and political implications of this disaster. Is it a problem for the Affordable Care Act as a whole, with its mixture of individual mandates and risk-pooling? Is it a political disaster for President Obama and the Democrats? Does this show us major problems in the way that government procures its contractors?

These are important questions, but some are asking a bigger one: is this a problem for liberalism as a political governance project? Does this rollout failure discredit the core goals of a liberal project, including that of a mixed economy, a regulatory state, and social insurance?

Conservatives in particular think this website has broad implications for liberalism as a philosophical and political project. I think it does, but for the exact opposite reasons: it highlights the problems inherent in the move to a neoliberal form of governance and social insurance, while demonstrating the superiorities in the older, New Deal form of liberalism. This point is floating out there, and it turns out to be a major problem for conservatives as well, so let's make it clear and explicit here.

So what has gone wrong? People are still trying to figure this out. There are the general problems of doing too much with too little time and resources and rolling out a big final product rather than smaller incremental pieces. These are things that, while problematic, don’t particularly have a political story to tell.

However, four bigger problems jump out.

The first has to do with means-testing the program. The biggest front-end problem is that users, before they can register, must “cross a busy digital junction in which data are swapped among separate computer systems built or run by contractors.”

Why is that? It is because the government needs to determine how much of a coupon it’ll write each person to go and buy private insurance. Beyond the philosophical components of means-testing (what the philosopher Jonathan Wolff calls “shameful revelations), the actual process requires substantial coordination between multiple government agencies with very different infrastructures.

As the GAO notes, “the data hub is to verify an applicant’s Social Security number with the Social Security Administration (SSA), and to access the data from the Internal Revenue Service (IRS) and the Department of Homeland Security (DHS) that are needed to assess the applicant’s income, citizenship, and immigration status. The data hub is also expected to access information from the Veterans Health Administration (VHA), Department of Defense (DOD), Office of Personnel Management (OPM), and Peace Corps to enable exchanges to determine if an applicant is eligible for insurance coverage from other federal programs that would make them ineligible for income-based financial subsidies.”

Rather than just being an example of bureaucratic infighting, each of these pieces of information is necessary to determine how aggressively the government should subsidize the private insurance individuals will buy, and the entire process will stall and fall apart if one of these checks isn’t completed quickly.

This by itself might not be a problem; however, the second issue is that the means-testing is necessary to link individuals up with individual private insurers. As the Washington Post notes, the back-end problems are in part the result of the site being “designed to draw from the offerings of private insurers, each with their own computer systems, rates and offerings.” And though this may be getting better, a serious concern has been inaccurate data being transmitted to the insurance companies. Which is to say that the emphasis on creating a digital marketplace where individuals get means-tested and can then pick and choose among insurers requires syncing on both ends, which is a difficult process.

So what? A third issue, and a major reason this is freaking people out, is that the first two problems could introduce adverse selection, as only the most needy will wait, and wait, to take advantage of the programs. As Yuval Levin has emphasized, the “danger of a rapid adverse selection spiral is much more serious than they believed possible this summer.”

And the fourth and final issue is that the federal government has had to pick up so much slack from rebelling states that didn’t want to implement health care. The state-level exchanges that were actually implemented appear to be doing okay, or at least significantly better. But the general problem is that “More than 30 states refused to set up their own exchanges, requiring the federal government to vastly expand its project in unexpected ways.”

So this tells a story. Let’s refer to these features of social insurance, which are also playing a major role in the rollout problems, as “Category A.” Now, what would the opposite of this look like? Let’s define the opposite of this as “Category B” social insurance. And let's take these two categories and chart them out:

What we often refer to as Category A can be viewed as a “neoliberal” approach to social insurance, heavy on private provisioning and means-testing. This term often obscures more than it helps, but think of it as a plan for reworking the entire logic of government to simply act as an enabler to market activities, with perhaps some coordinated charity to individuals most in need.

This contrasts with the Category B grouping, which we associate with the New Deal and the Great Society. This approach creates a universal floor so that individuals don’t experience basic welfare goods as commodities to buy and sell themselves. This is a continuum rather than a hard line, of course, but readers will note that Social Security and Medicare are more in Category B category rather than Category A. My man Franklin Delano Roosevelt may not have known about JavaScript and agile programming, but he knew a few things about the public provisioning of social insurance, and he realized the second category, while conceptually more work for the government, can eliminate a lot of unnecessary administrative problems.

Some of the more cartoony conservatives argue that this is a failure of liberalism because it is a failure of government planning, evidently confusing the concept of economic “central planning” with “the government makes a plan to do something.”

However, the smarter conservatives who are thinking several moves ahead (e.g. Ross Douthat) understand that this failed rollout is a significant problem for conservatives. Because if all the problems are driven by means-testing, state-level decisions and privatization of social insurance, the fact that the core conservative plan for social insurance is focused like a laser beam on means-testing, block-granting and privatization is a rather large problem. As Ezra Klein notes, “Paul Ryan's health-care plan -- and his Medicare plan -- would also require the government to run online insurance marketplaces.” Additionally, the Medicaid expansion is working well where it is being implemented, and the ACA is perhaps even bending the cost curve of Medicare, the two paths forward that conservatives don’t want to take.

I’ll be discussing this more, but the choice between Category A and B above will characterize much of the political debate in the next decade. It’s important we get more sophisticated analysis of what has gone wrong with the ACA rollout to better appreciate how utilizing “the market” can be far more cumbersome and inefficient than the government just doing things itself.

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“This massive IT launch sure came in on time, under budget, and without headaches” is a statement that nobody has ever said. But even controlling for that, Healthcare.gov looks to be having a disastrous launch.

People are naturally asking about the practical and political implications of this disaster. Is it a problem for the Affordable Care Act as a whole, with its mixture of individual mandates and risk-pooling? Is it a political disaster for President Obama and the Democrats? Does this show us major problems in the way that government procures its contractors?

These are important questions, but some are asking a bigger one: is this a problem for liberalism as a political governance project? Does this rollout failure discredit the core goals of a liberal project, including that of a mixed economy, a regulatory state, and social insurance?

Conservatives in particular think this website has broad implications for liberalism as a philosophical and political project. I think it does, but for the exact opposite reasons: it highlights the problems inherent in the move to a neoliberal form of governance and social insurance, while demonstrating the superiorities in the older, New Deal form of liberalism. This point is floating out there, and it turns out to be a major problem for conservatives as well, so let's make it clear and explicit here.

So what has gone wrong? People are still trying to figure this out. There are the general problems of doing too much with too little time and resources and rolling out a big final product rather than smaller incremental pieces. These are things that, while problematic, don’t particularly have a political story to tell.

However, four bigger problems jump out.

The first has to do with means-testing the program. The biggest front-end problem is that users, before they can register, must “cross a busy digital junction in which data are swapped among separate computer systems built or run by contractors.”

Why is that? It is because the government needs to determine how much of a coupon it’ll write each person to go and buy private insurance. Beyond the philosophical components of means-testing (what the philosopher Jonathan Wolff calls “shameful revelations), the actual process requires substantial coordination between multiple government agencies with very different infrastructures.

As the GAO notes, “the data hub is to verify an applicant’s Social Security number with the Social Security Administration (SSA), and to access the data from the Internal Revenue Service (IRS) and the Department of Homeland Security (DHS) that are needed to assess the applicant’s income, citizenship, and immigration status. The data hub is also expected to access information from the Veterans Health Administration (VHA), Department of Defense (DOD), Office of Personnel Management (OPM), and Peace Corps to enable exchanges to determine if an applicant is eligible for insurance coverage from other federal programs that would make them ineligible for income-based financial subsidies.”

Rather than just being an example of bureaucratic infighting, each of these pieces of information is necessary to determine how aggressively the government should subsidize the private insurance individuals will buy, and the entire process will stall and fall apart if one of these checks isn’t completed quickly.

This by itself might not be a problem; however, the second issue is that the means-testing is necessary to link individuals up with individual private insurers. As the Washington Post notes, the back-end problems are in part the result of the site being “designed to draw from the offerings of private insurers, each with their own computer systems, rates and offerings.” And though this may be getting better, a serious concern has been inaccurate data being transmitted to the insurance companies. Which is to say that the emphasis on creating a digital marketplace where individuals get means-tested and can then pick and choose among insurers requires syncing on both ends, which is a difficult process.

So what? A third issue, and a major reason this is freaking people out, is that the first two problems could introduce adverse selection, as only the most needy will wait, and wait, to take advantage of the programs. As Yuval Levin has emphasized, the “danger of a rapid adverse selection spiral is much more serious than they believed possible this summer.”

And the fourth and final issue is that the federal government has had to pick up so much slack from rebelling states that didn’t want to implement health care. The state-level exchanges that were actually implemented appear to be doing okay, or at least significantly better. But the general problem is that “More than 30 states refused to set up their own exchanges, requiring the federal government to vastly expand its project in unexpected ways.”

So this tells a story. Let’s refer to these features of social insurance, which are also playing a major role in the rollout problems, as “Category A.” Now, what would the opposite of this look like? Let’s define the opposite of this as “Category B” social insurance. And let's take these two categories and chart them out:

What we often refer to as Category A can be viewed as a “neoliberal” approach to social insurance, heavy on private provisioning and means-testing. This term often obscures more than it helps, but think of it as a plan for reworking the entire logic of government to simply act as an enabler to market activities, with perhaps some coordinated charity to individuals most in need.

This contrasts with the Category B grouping, which we associate with the New Deal and the Great Society. This approach creates a universal floor so that individuals don’t experience basic welfare goods as commodities to buy and sell themselves. This is a continuum rather than a hard line, of course, but readers will note that Social Security and Medicare are more in Category B category rather than Category A. My man Franklin Delano Roosevelt may not have known about JavaScript and agile programming, but he knew a few things about the public provisioning of social insurance, and he realized the second category, while conceptually more work for the government, can eliminate a lot of unnecessary administrative problems.

Some of the more cartoony conservatives argue that this is a failure of liberalism because it is a failure of government planning, evidently confusing the concept of economic “central planning” with “the government makes a plan to do something.”

However, the smarter conservatives who are thinking several moves ahead (e.g. Ross Douthat) understand that this failed rollout is a significant problem for conservatives. Because if all the problems are driven by means-testing, state-level decisions and privatization of social insurance, the fact that the core conservative plan for social insurance is focused like a laser beam on means-testing, block-granting and privatization is a rather large problem. As Ezra Klein notes, “Paul Ryan's health-care plan -- and his Medicare plan -- would also require the government to run online insurance marketplaces.” Additionally, the Medicaid expansion is working well where it is being implemented, and the ACA is perhaps even bending the cost curve of Medicare, the two paths forward that conservatives don’t want to take.

I’ll be discussing this more, but the choice between Category A and B above will characterize much of the political debate in the next decade. It’s important we get more sophisticated analysis of what has gone wrong with the ACA rollout to better appreciate how utilizing “the market” can be far more cumbersome and inefficient than the government just doing things itself.

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Daily Digest - October 23: Jobs Report Wasn't Worth the Wait

Oct 23, 2013Rachel Goldfarb

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Weak Job Gains May Cause Delay in Action by Fed (NYT)

Click here to receive the Daily Digest via email.

Weak Job Gains May Cause Delay in Action by Fed (NYT)

Catherine Rampell reports on the September jobs report, released more then two weeks behind schedule thanks to the shutdown. The September numbers are weak, and the rest of the year's jobs reports will be impacted by the whiplash of shutdown.

The Jobs Report was Totally Blech. And it May Get Worse. (WaPo)

Neil Irwin considers what conclusions should be drawn from the September jobs report. His top two are that the Fed's decision to maintain quantitative easing looks better and better, and that sequestration is probably to blame for weak growth.

Wall Street’s Government Disconnect (The Daily Beast)

Daniel Gross asks why Wall Street reacts so frantically to every suggestion of federal or state government default, when such a thing has never happened. Only municipalities have defaulted, so why did so many companies shed bonds that were due in October?

Don’t Blame Health Law for High Part-Time Employment (WSJ)

Ben Casselman says that for all that anti-Obamacare politicians try to connect the law to rises in part-time employment, the data just isn't there. Over the past year, when the employer mandate was still expected for 2014, part-time work has stayed flat.

There Is No Evidence That Obamacare Will Make Poor Americans Less Likely to Work (The Atlantic)

Matthew O'Brien argues that Oregon's 2008 Medicaid expansion, which offered slots in the program by lottery, offers proof that obtaining health insurance won't cause people to stop working. That isn't surprising: healthcare doesn't buy groceries.

Sara Ziff’s Underage-Model Bill Gets Signed Into Law (NY Mag)

Charlotte Cowles celebrates the new law that gives underage models the protections that other child performers in New York have had for years, like education requirements. The law will be in effect before the next New York Fashion Week.

  • Roosevelt Take: Roosevelt Institute Fellow Dorian Warren wrote about Sarah Ziff and the Model Alliance when they first began their labor organizing efforts.

CHART: Welfare Reform Is Leaving More In Deep Poverty (MoJo)

Stephanie Mencimer looks at a Center on Budget and Policy Priorities report on TANF, which finds that monthly cash benefits have steadily lost value since 1996's welfare reform. That's happened alongside an 130% increase in families with children living in extreme poverty.

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Daily Digest - October 22: Keep an Eye on Banking Reform

Oct 21, 2013Rachel Goldfarb

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The New Populists (In These Times)

Sarah Jaffe considers the work that Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) have been doing to bring back banking reform. This populist push isn't necessarily making changes today, but it's bringing the issues into the news.

Click here to receive the Daily Digest via email.

The New Populists (In These Times)

Sarah Jaffe considers the work that Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) have been doing to bring back banking reform. This populist push isn't necessarily making changes today, but it's bringing the issues into the news.

The $13 Billion JPMorgan Settlement Is a Good Start—Now Someone Should Go to Jail (The Nation)

William Greider argues that until individual bankers or the corporate "persons" of banks are prosecuted as criminals, the banks aren't being treated equally under the law. Paying a fine that is almost meaningless to the bank isn't enough.

After the Shutdown and the Debt Ceiling Row – What Happens Next? (The Guardian)

Jana Kasperkevic looks at what's to come in the next couple of months of budget negotiations. She sees a trend toward multiple continuing resolutions, semi-annual fiscal drama, and political theatrics, which aren't exactly good policy.

Poll: Major Damage to GOP After Shutdown, and Broad Dissatisfaction with Government (WaPo)

Dan Balz and Scott Clement report on a new poll in the aftermath of the shutdown. Even a majority of supporters of the tea party disapproved of the shutdown, and support for Congressional Republicans is at an all-time low.

Jersey City Mayor Signs Country’s Seventh Paid Sick Days Law (ThinkProgress)

Bryce Covert reports on Jersey City's new law, which is estimated to give 30,000 workers new access to paid sick leave. State- and city-wide pushes for these bills are growing, which isn't surprising when paid sick leave actually saves employers money.

The Solar Revolution is Being Fought by the Middle Class (Quartz)

Todd Woody looks at a report from the Center for American Progress, which shows that the vast majority of home solar panels are being installed in middle-class neighborhoods. He suggests that middle-class families see solar energy as a money saver.

New on Next New Deal

Block a Grand Bargain with Bold Progressive Solutions to Social Security and Medicare

Roosevelt Institute Senior Fellow Richard Kirsch argues that now is the time to fight for solutions to the problems facing Social Security and Medicare. The proposals he suggests would fix the financial solvency of these programs without cutting a dime in benefits.

What Did the Government Shutdown Battle Really Accomplish?

Roosevelt Institute Senior Fellow Bo Cutter considers what really came out of the government shutdown. Perhaps most importantly, it set the stage for the President to revitalize his second term with a new agenda, since he's one of the few politicians to retain any credibility.

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Block a Grand Bargain with Bold Progressive Solutions to Social Security and Medicare

Oct 21, 2013Richard Kirsch

Going into the post-shutdown budget discussions, progressives should take the offensive with proposals that would fix problems with Social Security and Medicare without any cuts.

Going into the post-shutdown budget discussions, progressives should take the offensive with proposals that would fix problems with Social Security and Medicare without any cuts.

Republicans may not have succeeded in defunding the nations’ newest social insurance program, ObamaCare, but they now are aiming at the foundational programs, Social Security and Medicare. And this time, they’ll have the President on their side. It would be a mistake for progressives to assume that a grand budget bargain will fall apart once again, even if that remains likely. Instead, we need to turn the debate from cutting social insurance to strengthening both the finances and benefits of both big retiree programs. The best way to do that is by championing simple, bold solutions.

In his post shutdown press conference, President Obama repeated his call for changes in Social Security and Medicare. His 2014 budget included cuts to benefits for both.  That aligns him with House Speaker John Boehner, who called for savings in Social Security and Medicare during the shutdown battle. Senators from both parties have shown their willingness to support benefit cuts as part of a big budget deal.

Yes, it is likely that the next attempt to reach an overall budget deal will also collapse, as the last ones have, particularly in the beginning of an election year. The biggest barrier to a bad deal up to now has been Democratic insistence, repeated on the same day as the President’s press conference by Senate Majority Leader Harry Reid, that tax hikes – with revenue coming from big corporations and the wealthy –be part of the deal. But if Republicans were willing to close some corporate tax loopholes – which some of their tea party members see correctly as examples of crony capitalism – Democrats would be under tremendous pressure from the President and others in their party to go along.

Progressives must rely on more than saying “hands off Social Security and Medicare,” although that should remain central to our message. We need a strong offense, to go with that potent defense. By putting forward simple, broadly popular, progressive proposals that actually enhance benefits and add money to Social Security and Medicare, we enable Democratic allies in Congress to set the agenda and counter claims that they are not taking action to address the real solvency problems. And we also help set the agenda for the inevitable future deal to address both programs’ financing.

Here are two simple, popular, powerful proposals. On Social Security, make the richest 5% people pay into Social Security on all their earnings, just like 95% of workers now do. Use the new revenue to both boost Social Security benefits – which are too low – and extend the solvency of the Social Security Trust fund. On Medicare, slash the cost of prescription drug prices just like the Veterans Administration and all our global competitors do, saving hundreds of billions of dollars in the next decade.

The Social Security proposal has been introduced in both houses of Congress, with legislation by Senator Tom Harkin of Iowa (S.567) and Rep. Linda Sanchez of California (H.R.3118), which would boost benefits in two ways: changing the way benefits are calculated (designed to particularly help low-and-moderate income seniors) and changing the inflation adjuster Social Security uses to the CPI-E, which more accurately captures what seniors pay. This is exactly the opposite of the chained CPI proposed by President Obama, which undercounts what seniors typically purchase. The legislation raises the money to pay for the benefits and extends the Trust Fund by gradually removing the cap on earnings taxed by Social Security, which is $113,700 in 2013. Doing so would extend the period during which the Trust Fund has enough money to pay all benefits from 2033 to 2049.

Progressives have long talked about Medicare using its enormous purchasing power to get the same kind of low drug prices paid by the Veterans Administration or every other country on the globe. While estimates of the savings vary, they clearly would be substantial, tens of billions each year, much more than the cuts to Medicare included in the President’s budget. There are two bills in Congress that aim to do this, one sponsored by Vermont Rep. Peter Welch and Minnesota Senator Amy Klobuchar and the other introduced by Illinois Rep. Jan Schakowsky and Senator Dick Durbin. While neither is designed to get the maximum savings – a combination of the approaches taken in each is needed – either would work to make the point that we can strengthen Medicare by stopping the drug companies from ripping off the country.

But having legislation is really window dressing to the strategy here: offering bold, popular solutions that deal with both sides of the problems facing Social Security and Medicare: benefits that are too small for the retirement security of seniors and the shortfalls in financing of both programs. While elites want to focus on the “entitlement crisis,” the public is well aware of the financial pressures most seniors now face and the looming retirement crisis, and is adamantly opposed to cuts in both programs.

It is up to progressives, inside and outside of Congress, to seize the moment. It’s a simple message: instead of making painful cuts to Social Security and Medicare we can boost benefits for seniors and make sure that the programs are there for the long term by having millionaires pay into Social Security like everyone else and stopping drug companies from ripping off Americans. 

Driving this message will turn the grand bargain debate on its head, and will start setting the terms for progressive solutions when Congress does take action on both programs in the next few years. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

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