James Pethokoukis

Politics and policy from inside Washington

The day healthcare reform died?

Jun 18, 2009 23:58 UTC

At least as envisioned by the most gung-ho LibDem proponents. Ezra Klein gives it to them straight after viewing the latest Senate Finance Committee proposal:

Sources say that it’s a major scale-back of the outline they had before. Specifically, subsidies have dropped from 400 percent of the poverty line to 300 percent. Medicaid eligibility has been tightened to 133 percent of poverty for children and pregnant women and 100 percent of poverty for parents and childless adults. The plans being offered in the exchange have seen their actuarial values sharply lowered.

Beyond the changes, this is also the clearest look we’ve had at the specific policies being considered. There’s a fairly strong individual mandate, albeit with exemptions for those beneath the poverty line, those who would have to spend more than 15 percent of income for a plan, and undocumented workers. There are a variety of options for an employer mandate, or the absence of one. Sen. Kent Conrad’s co-op idea is up for discussion. There’s no public plan mentioned anywhere in the document.

Do you think my headline overstate things? Listen to the Daily Kos:

Without a public option, I’d rather we stop the absurd talk of “reform” and recognize that any bill passed would mainly be for show, but if we were to seriously consider a bill without such an option, I think the one healthcare reform that would make a difference is to cancel govt health insurance for all senators, representatives, cabinet members, etc.

COMMENT

Housing debacle causes never mentioned, bad builders and the arbitration clauses that protect them. Please read my testimony to the congressional committee.This was the beginning:
ARE YOU NEXT?
The Many Levels of Texas Bureaucracy
by Jordan Fogal

My First Six Months in a Tremont Home
We purchased our Tremont/Stature home April of 2002. The first night in the house my husband took a bath in the garden tub on the third floor. When he got out, 100 gallons of water came through the dining room ceiling and flooded the living room and dining room on the second floor. While the plumbing was being connected and the ceiling replaced the yard began to flood. Ankle deep water stood and the grass rotted. The kitchen window started leaking; the stucco outside cracked and rust colored water ran out. Then we were hit with a $500 dollar assessment from the newly elected homeowners association because Tremont/Stature had stolen our homeowner’s dues. This is what we got with a $360,000 dollar home?

Living in an ADR State
If you live in Texas, an ADR State you no longer have seventh amendment rights. You are told to go to the TRCC for RCLA and SIRP because we no longer have the DTPA and you will end up in AAA. Now, do you have any idea what I am talking about? Neither do most Texans.

· ADR – Alternative Dispute Resolution… it means you don’t get a trial by jury and you cannot sue the builder.

· TRCC – Texas Residential Construction Commission… a new state bureaucracy that regulates homebuyers.

· RCLA – Residential Construction Liability Act… a state law that regulates homebuyers. Also known as Requires Considerable Legal Assistance.

· SIRP – State Inspection Resolution Process… a mandatory state procedure that requires homeowners pay a fee of $350, $450 or $650 for the SIRP complaint process.

· DTPA – Deceptive Trade Practices Act… and act that once protected homebuyers from deceptive business practices, which was nullified by the passage of TRCCA.

· AAA – American Arbitration Association… works well among equals in business.

Believe me; AAA conducts business like a demented collection agency at the request of a builder in Texas. Beware; it is not a fair playing field. If you go into their process have a minimum of $50,000 on hand and be prepared to pay $100,000. You have to pay dearly even to file, and in my case the filing fee is $6,000.

Then you must pay an arbitrator $2000 plus, per day, plus an hourly fee for pre and post study. AAA does not provide a maximum limit on costs, so they ask for a credit card authorization. The entire burden of proof is on you – the homebuyers. You pay for all expert testimony, depositions, a stenographer, and even the rent on the room to conduct the arbitration. Of course your attorney’s fees are on top of that.

The courts uphold binding arbitration, not having a clue as to what is going on behind closed doors. People come out of arbitration broke, bankrupt, and under secrecy agreements. It is not a level playing field. The great, once sovereign state of Texas was bought by the homebuilders for over 9.4 million dollars in campaign contributions. My advice after being in this system for 29 months is, don’t buy a new house in the state of Texas.

What I am left with…
We are left with a 30-year mortgage on a house that didn’t last two and a half years. Our house has, buckling hardwood floors, flashing problems, water intrusion in the walls and some ceilings, sagging second and third floors, and a shower wall that is bowed out and has fallen in. There are Stachybotrus, aspergillum and chaetomium molds that grow on the baseboards, on the trim, up the walls, in the shower and even growing out of the carpet… We now live in an apartment.

Jordan Fogal – jfogal281@aol.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it

ARE YOU NEXT?
The Many Levels of Texas Bureaucracy
By Jordan Fogal

ARE YOU NEXT?
The Many Levels of Texas Bureaucracy
by Jordan Fogal

My First Six Months in a Tremont Home
We purchased our Tremont/Stature home April of 2002. The first night in the house my husband took a bath in the garden tub on the third floor. When he got out, 100 gallons of water came through the dining room ceiling and flooded the living room and dining room on the second floor. While the plumbing was being connected and the ceiling replaced the yard began to flood. Ankle deep water stood and the grass rotted. The kitchen window started leaking; the stucco outside cracked and rust colored water ran out. Then we were hit with a $500 dollar assessment from the newly elected homeowners association because Tremont/Stature had stolen our homeowner’s dues. This is what we got with a $360,000 dollar home?

Living in an ADR State
If you live in Texas, an ADR State you no longer have seventh amendment rights. You are told to go to the TRCC for RCLA and SIRP because we no longer have the DTPA and you will end up in AAA. Now, do you have any idea what I am talking about? Neither do most Texans.

· ADR – Alternative Dispute Resolution… it means you don’t get a trial by jury and you cannot sue the builder.

· TRCC – Texas Residential Construction Commission… a new state bureaucracy that regulates homebuyers.

· RCLA – Residential Construction Liability Act… a state law that regulates homebuyers. Also known as Requires Considerable Legal Assistance.

· SIRP – State Inspection Resolution Process… a mandatory state procedure that requires homeowners pay a fee of $350, $450 or $650 for the SIRP complaint process.

· DTPA – Deceptive Trade Practices Act… and act that once protected homebuyers from deceptive business practices, which was nullified by the passage of TRCCA.

· AAA – American Arbitration Association… works well among equals in business.

Believe me; AAA conducts business like a demented collection agency at the request of a builder in Texas. Beware; it is not a fair playing field. If you go into their process have a minimum of $50,000 on hand and be prepared to pay $100,000. You have to pay dearly even to file, and in my case the filing fee is $6,000.

Then you must pay an arbitrator $2000 plus, per day, plus an hourly fee for pre and post study. AAA does not provide a maximum limit on costs, so they ask for a credit card authorization. The entire burden of proof is on you – the homebuyers. You pay for all expert testimony, depositions, a stenographer, and even the rent on the room to conduct the arbitration. Of course your attorney’s fees are on top of that.

The courts uphold binding arbitration, not having a clue as to what is going on behind closed doors. People come out of arbitration broke, bankrupt, and under secrecy agreements. It is not a level playing field. The great, once sovereign state of Texas was bought by the homebuilders for over 9.4 million dollars in campaign contributions. My advice after being in this system for 29 months is, don’t buy a new house in the state of Texas.

What I am left with…
We are left with a 30-year mortgage on a house that didn’t last two and a half years. Our house has, buckling hardwood floors, flashing problems, water intrusion in the walls and some ceilings, sagging second and third floors, and a shower wall that is bowed out and has fallen in. There are Stachybotrus, aspergillum and chaetomium molds that grow on the baseboards, on the trim, up the walls, in the shower and even growing out of the carpet… We now live in an apartment.

Jordan Fogal – jfogal281@aol.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it

The link between deficits and taxes

Jun 18, 2009 20:27 UTC

This chart from ClusterStock confirms what I have been saying: big deficits lead to higher taxes (1982, 1990, 1993, 2009) … at least I think it does

debt-and-taxes

COMMENT

Weather we like it or not …

The economy is a complex and chaotic system. Dynamic and constantly changing conditions are just as impossible to control as the weather. Hurricanes, tornados, dark clouds, sunny days, beautiful weather are beyond the control of man and change from day to day, hour to hour.

Perhaps the mission of the key watchdog should be like NOAA: to monitor and predict and forewarn of disasters looming. Another body would be (capitalized) to come in and rescue and clean up after storms and disasters. Like flood insurance, investors would by “disaster recovery insurance” that would capitalize these disasters for quick recovery.

Although Hurricane Katrina showed us that government agencies charged with responsibilities to respond and rescue the public can (and do) fail miserably, overall, there is no way to stop hurricanes. A better case can be made for forewarning and rescue. If there is sufficient forewarning, investors can use better judgment and “seek shelter” and save themselves, thus saving much carnage and avoidable destruction.

The NOAA model, or in this case MOAN (Monetary Observation And Nominalization,) would be charged with responsibility of alerting and forewarning the public and policy makers of critical conditions occurring in the economy. GROAN would be the public insurance agency that would provide disaster recovery insurance.

A type of value added (value lost) tax could be tacked on to every stock transaction (like a broker’s fee) that would go into a “recovery fund.” This would have many benefits, including a “volatility governor” effect by creating a slighly higher cost to trade stocks, thereby slowing the system and reducing volitility, without impacting economic activity.

I would think this would be policitally acceptable as this would be a type of “greed tax” somewhat like a “sin tax” on tobacco and alcohol.

David Matthews

Posted by David Matthews | Report as abusive

Jimmy P’s Top Ten blogs posts of the day

Jun 18, 2009 18:24 UTC

1) What is the surge in health insurance stocks telling us. Frances Cianfrocca thinks he knows.

2) Matthew Yglesias thinks Republicans think killing healthcare will make it 1994 redux.

3)  Hans Bader noticed that the Obama administratin is doubling down on the Community Reinvestment Act.

4) College-educated workers outside of HealthEdGov are getting killed, explains Michael Mandel.

5) Mark Perry of Carpe Diem asks a question and makes an intriguing point

With $50,000 or more in household income, wouldn’t many or most of those 17.6 million uninsured households be without insurance voluntarily? That is, couldn’t most of those households afford health insurance? Alternatively, with those income levels (especially the 9 million with income above $75,000), couldn’t many of those households choose to forego health insurance in favor of being “self-insured,” at least for routine health procedures? Given the widespread availability of more than a thousand convenient and affordable retail health clinics around the country at Wal-Marts, Meijers, CVSs and Walgreens, these households could easily be on the “pay-as-you-go” model of self-insurance for health care.

6) My pal Barry Ritholtz rips the Obama financial reform plan.

7) Ezra Klein makes some point  or other about financial regulation. But he does mention the Green Lantern.

8) Scott Grannis (Calafia Beach Pundit) is exactly right

While we have very likely seen the end of the recession, the question going forward is how strong the recovery will be. So far, numbers like this don’t say much more than that it will a gradual recovery, not a V-shaped one. But even a gradual recovery is far, far better than the depression everyone was worried about at the end of last year. The reality has proved to be orders of magnitude better than the fears, and that is the big reason that equity markets are up and bond yields are up. Even though the reality (modest growth from a low base) seems not very exciting.

9)  David Goldman (Inner Workings) on deflation and inflation:

High savings rates are deflationary. Savings postpones consumption. Savers forego consumption of present goods for future goods by purchasing securities rather than current production. That drives down the price of current goods and increase the price of future goods (bonds). Japan’s great deflaton of the past 20 years is in part the result of persistently high savings rates due to the country’s extremely high savings rates. Japan’s population is so old that it will begin spending down its savings, and its deflation should moderate. But the deflationary impact of higher saving in America is a powerful counterweight to the inflationary impulses coming from the government and central bank.

10) Keith Hennessey explains the “coop” approach to heatlthcare reform.

COMMENT

There is a lot of talk regarding ‘lessons learned’ from this ‘recession/depression’. However until our society figures out a way to ‘be happy’ without resorting to consumption we will repeat the past. And on a larger scale. Image if only half of the rest of the world wanted to copy the life style of Americans. Global warming?? Shortage of resources? Lack of drinking water? The planet just could not support it. The question is, can we be happy without shopping for bigger/flasher/newer ‘things’? Can happiness be found in community? In family? Can the fellowship of Man replace walking the Mall? If not, I fear we will not have a happy future.

Posted by jon markoulis | Report as abusive

Democrat infighting on healthcare

Jun 18, 2009 14:50 UTC

I think this sums up the centrist-liberal divide on healthcare (via The Hill):

There is concern among centrists in the caucus that the draft bill, to be released Friday, will reflect some of the more liberal ideas in the caucus, although leadership has already rejected the idea of a single-payer system. It is being put together by the House Education and Labor, Energy and Commerce and Ways and Means committees.  “You have a bunch of crazy liberal chairs and their crazy liberal staffers, and they want to lay down a marker,” said a senior Democratic aide.

Too much power for the Fed?

Jun 18, 2009 14:45 UTC

That is the conclusion of my pal Larry Kudlow of CNBC:

This is like the fox guarding the henhouse. After all, the Fed’s overly loose money policies created the asset bubble — including housing, commodities, and energy — in the first place. Near-zero interest rates, huge money growth, and total disregard for the plunging dollar are what set up the housing boom and the unfortunate overleveraging by consumers, mortgage borrowers, and Wall Street securitizers.

It also set up the astronomical $150 oil shock, which came alongside the Fed’s overly tight money policies to offset the prior loose policies that would cause this credit crunch and deep recession. In fact, looking back to the last two bubbles — the tech bubble of 1999-2000 and the housing/energy bubble after that — it was the Fed’s pillar-to-post go-stop-go-stop lurches that deserve the principal blame for the economic messes that ensued.

The Great Moderation of the ’80s and ’90s has given way to extremism in Fed policy. And we may be in danger of repeating it all over again, with a new round of near-zero interest rates and a massive 11 percent growth of M2 over the past nine months. …

Missing from the package is a reform that would put Fed monetary policy back on a commodity-price rule, including gold and the dollar. This rule was basically used from the early ’80s to the late ’90s, during Paul Volcker’s Fed term and the first half of Alan Greenspan’s term. This would have been the best-possible reform, but of course it’s not in the proposal.

So now the Fed has become the supreme Keynesian unemployment vs. growth Philips-curve tinkerer. Until this totally mistaken policy is changed, we can have ten more reregulation plans that will not fix the real problem.

COMMENT

Sad to see what America has become and where we’re headed. Dump the fed, return us to a gold and silver coin currency, and cut the federal government down to size if you want to fix something.

Posted by jason | Report as abusive

A few questions for Timothy Geithner on financial reform

Jun 18, 2009 14:26 UTC

If I was in Congress and Treasury Secretary Geithner was testifying before my committee (as he is doing today in the House and Senate), I might ask him the following:

1) “Do you think the Fed and the Financial Services Oversight Council would actually raise capital standards or stop certain practices in the middle of a perceived bubble? Wouldn’t they be accused a killing a profitable scenario?”

2)  “Or would they merely warn of a dangerous situation? But if there was no actual regulatory action, wouldn’t that be tantamount to a de facto seal of approval and exacerbate the problem?

3) “Have you just given up on dealing with “too big too fail” since your approach seems to enshrine it and thus create a implicit government guarantee of TBTF institutions? And doesn’t that, then, give then an edge in the marketplace? And wouldn’t that make them even bigger?

4) Was it politics or economic efficiency that led you away from streamlining the regulatory structure?

5) How exactly would you prevent the new consumer financial products safety commission from stifling innovation? Why not just simply better educate consumers and heighten financial literacy?

What can Obama really get done this year?

Jun 18, 2009 14:02 UTC

The always insightful Dan Clifton of Strategas Research gives his three cents:

1) $700 to $800 BN Healthcare Reform passes later this year with a major focus on Medicaid expansion and some cuts to providers;

2) Cap and trade dies of a slow death in the Senate and later replaced with a more moderate energy bill including a renewable portfolio standard and some transmission improvements;

3) A watered down financial regulation bill. However, if additional financial problems develop later this year, financial regulation could become more aggressive rather than less aggressive.

Polls, Obama and the economy

Jun 18, 2009 13:57 UTC

Both the NYT and WSJ have polls out and from them I draw these quick conclusions:

1) Americans have begun to treat Obama like he’s a regular politician, though a well liked one. You can only burn white-hot for so long.

2) Americans have huge reservations about the amount of intervention in the economy and what it is costing.

3) Americans are no longer worried about economic collapse, but still quite worried in general. Again, a normalization of economic fears.

4)  Healthcare remains low on people’s list of concerns. So does gas prices. Expect the latter to rise.

5) Another 15 months of high unemployment and voters will be quite grumpy.

Inflation vs. Deflation

Jun 18, 2009 13:51 UTC

The always great Ed Yardeni has a smart take on the inflation-deflation debate, comparing US quantitative easing efforts to those of Japan in the 1990s:

During that time, the Bank of Japan (BoJ) adopted Quantitative Easing (QE) in a desperate effort to stop deflation and revive bank lending. Nevertheless, bank loans plunged during this entire period, and have been rising anemically since 2005. Japan’s CPI inflation rate, ex food and energy, on a y/y basis has been below zero this decade, with a brief peek just above zero late last year.

Japan was in a liquidity trap. All the reserves pumped into the commercial banking system by the BoJ had absolutely no stimulative impact on bank lending and the economy, and no inflationary consequences. The BoJ abandoned QE in early 2006. Reserve balances plunged 76.2% from January 2005 to November 2006. In other words, the BoJ executed its exit strategy from QE and once again there was no obvious impact on the economy or inflation. …

In any event, Japan’s experience confirms that inflation isn’t always and everywhere a monetary phenomenon. It is more complicated than that. Market structure plays an important role. Competitive markets tend to be less prone to inflation than highly regulated and monopolized ones. Labor costs are the key drivers of inflation. Unions don’t have the power they once had, and productivity has been growing even during this recession. By definition, stimulative monetary policy isn’t inflationary in a liquidity trap, when the banks aren’t lending and the borrowers aren’t borrowing.

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