Posts Tagged ‘Central Ohio’

Income Disparity And Rational Market Considerations

November 27, 2013

            Analysis was greatly surprised today to learn that what it had suggested in the October 24, 2013 post (Income Disparity Part Two Or What Is Wrong With This Picture?) is already in progress within another central Ohio community (in a different form but the same perspective). Analysis has repeatedly critiqued the current Licking County/Newark model of subsidizing corporate enterprise in hopes of revitalizing jobs, urban development, etc. Various posts have revealed that this approach primarily reinforces the income disparity growing yearly in the US. It was suggested that instead of the current dysfunctional model of corporate welfare used to attract business tenants to the greenfield industrial “campuses” around central Ohio, the city of Newark should pursue a model that rewards residential inhabitants to revitalize downtown Newark. Such a program (of sorts) already exists. It is entitled the My Home Program. “The City of Whitehall, Apprisen and Huntington Bank have partnered together to offer a special mortgage financing offer exclusively for City of Whitehall borrowers participating in the My Home Program. Borrowers must meet qualification requirements.  Buyers can receive 4% of loan amount (up to $5,000) in down payment assistance.” (from the City of Whitehall official website). It has already been successfully implemented for over 30 residential homebuyers. Apprisen is a central Ohio non-profit consumer credit counseling service and Huntington Bank is, well, one of the largest and oldest banks in Franklin County (akin to Licking County’s Park National Bank). Here is a program that is directed toward encouraging residential ownership that is now working. The city of Newark, with its 43% non-owner occupant residential housing should take note. Perhaps this may be of interest to the newly elected city council. Pass it on.

 

            On a separate note, here is more insight on the corporate subsidy for “jobs creators” and their ability to continue the downward spiral of income disparity in the US. The Boeing Company, flush with future orders on its commercial aircraft (in addition to its defense contracts) is looking to honor these with an expansion of manufacturing capacity. Its latest contract offer with the machinists union having been rejected, and the company no longer desiring to negotiate, has resulted in its letting out bids for communities across the US for sites to build its new 777X aircraft. Places like North Charleston South Carolina are only too eager to spend public money to purchase and develop “greenfield” facilities (clear open land developed with new custom buildings). The public expenditure would eventually be paid off through the taxes on the folks who would be working the jobs involved with this production. In addition to this gifted facility, Boeing would also get tax breaks, etc. In a November 25, 2013 article entitled Boeing Picks 15 Potential Sites Nationwide To Build 777X, The Seattle Times’ Dominic Gates writes, “Aviation analyst Richard Aboulafia of the Teal Group expressed skepticism Saturday that Boeing would choose a greenfield site — a completely new location with no experience in airplane manufacturing. “That’s just really a bad idea,” said Aboulafia. “You are adding multiple layers of risk both in terms of workforce and infrastructure.” Boeing did that on the 787 Dreamliner program when it chose South Carolina to build big fuselage sections. That caused such delays and quality problems in the jet program’s early years that the chief executives of both Emirates and Qatar Airways, whose orders launched the 777X in Dubai last week, declared in interviews there that they have told Boeing not to repeat that experience.” Later Gates reports, “He [Boeing spokesperson Doug Alder] said the company still has “no plans to re-engage in contract talks with the Machinists union.” The 31,000 members of the International Association of Machinists (IAM) union on Nov. 13 rejected by a 2-to-1 margin a Boeing contract offer that would have secured the 777X work for Washington state. The proposed contract would have frozen employee pensions and introduced a new wage structure that drastically slowed wage growth for new hires, who would take 16 to 20 years to reach the top of the pay scale instead of the current six years.” Other sources (radio, online analysts, etc.) report that it is a known fact that the current Boeing corporate leadership despises unions and favors a place like South Carolina, a “right to work” state. Gates concludes his article, “With the state-versus-state competition now truly under way for the 777X work, industry analyst Aboulafia said that, “From the standpoint of economics, none of this makes sense.” Although Boeing is at loggerheads with the union over reining in long-term labor costs, those costs are such a small proportion of the overall cost of building airplanes that, “You could meet the union halfway and it wouldn’t have any material impact on the competitiveness of your pricing.” “The only thing that makes sense is that (Boeing executives) are just angry, doing this in a spirit of distaste and antipathy” toward the union, he said. “Maybe the union has brought that on themselves,” Aboulafia added. “I don’t know. But it’s nothing to do with rational market considerations.””

To Repeat This Menu, Press 2

November 17, 2013

            In the news this week a German automotive component manufacturer came out as a new tenant at the Central Ohio Aerospace and Technology Center campus (Xperion, 59 jobs welcomed to area, The Newark Advocate 11-15-13, Kent Mallett). The “jobs creators” concelebrated the exchange of vows. All the trappings of this commitment ceremony were there – a traditional ground breaking with tent (though the spec building was already under construction) and German pilsner for all (sans Polka band. Oom Pah!). Continuing news of the past weeks is the closing of Meritor (just miles down the road) with its accumulated loss of hundreds of jobs. It is reported to already be packing up and moving production machinery out of its Heath factory (no “campus” for this manufacturer). The company made its workers a non-negotiable offer of “considering” to not relocate if the workers took a 62% pay cut (and gave management half of their lunch).

 

            Not news but what makes the news, cell phones are ubiquitous though they haven’t quite done in line phones (everyone has one; it is how we “stay connected”). Line phones, like electric power, were the sign of progress for a community, especially rural ones. Those “served” by this convenience reported outages or destruction for the benefit of all. One would call in a noise on the line, damage to a pole, or that a neighbor’s phone was out because it made things better for everyone. In turn the company relied on its eyes and ears in the community that it profited from. Today you can’t do that (the same with cell phones, utilities, etc.). When one calls in to make such a report, a wonderful “Suri” clone comes on the phone claiming intimate interest if only you’ll push her buttons. There is no capacity to say something is wrong with the system as one is immediately accosted with assuming personal responsibility for announcing (and owning) the problem. This is instantly followed by arranging to set up an appointment for the company’s representative (technician) to meet with the problem (you) and take care of the request (complaint). All this may entail a service charge, “Suri” is not remiss to announce. In short, it is made clear (through “Suri”) that the only beneficiary of all this will be solely the one who is kvetching (who likewise will end up paying for it). No possibility to consider any of this from a community standpoint (I’m calling for my neighbor, or for the last thirty years whenever this kind of interruption has taken place, it is because something is awry at your junction box, etc.). Later, the squeaky wheel will receive a deeply personal missive from “Suri” concerned that “we made things right” and inquiring “how did we do?”

 

            ““That (teamwork) effort doesn’t end today or when you take possession of your building and begin operations,” Johns [Heath Mayor Mark Johns] said. “You’ve heard about the teamwork, and I want you to know you are now a part of that team.” [To which Lt. Gov. Mary] Taylor added, “This united effort is why we are all standing here today. We’re looking not only to help those here today, but want the same opportunities to continue for future generations throughout Ohio.”” (Mallett, betrothal ceremony report) Wiktionary describes “hegemony” as “Domination, influence, or authority over another, especially by one political group over a society or by one nation over others”. In short, it is what determines the topic, the conversation, and what can be said and how it can be said. To repeat this menu, press 2.

Shorts

November 13, 2013

            Yahoo news page had this headline: “Why New Employees Can’t Write, And Why Employers Are Mad” on CNBC (11-12-13). I couldn’t read the article since it was a video (and you don’t read videos, you watch them). The dictionary lists the word “and” as a conjunction. Logic says when two items are conjoined by “and”, they are true if and only if both cases apply (in contrast to “or” where only one of the two need apply). Reading and writing are inseparable. Sparta owner Chris Ramsey bemoaned the limited use of his in house reading room library. “No one reads.” An acquaintance spoke of a job teaching writing at CTEC, and of the challenge it presented. New employees may not be able to write but they probably have incredible ability creating, finding and getting videos, photos or appropriated texts online.

 

            Speaking of employers, one of Newark’s biggest was represented at the Local Leaders Breakfast at Moundbuilders Country Club (according to an article by The Newark Advocate, Kent Mallett 11-12-13, State Farm: No layoffs here, but some jobs moving).  Susan Krieger, vice president of operations, is quoted as rationalizing the challenge of luring professional workers with: “That’s a little bit more difficult to find in Licking County, it’s hard to attract a lot of college people to our Newark location.” (as opposed to, say, New Albany?) What the incidentals are regarding such a claim is irrelevant. One begins to understand how class myths, stereotypes and tropes are perpetuated and reproduced. Within walking distance of the State Farm offices is the large campus of COTC/OSU, with Denison University just down the road. Many “professionals” commute both from Newark to Cols. as well as Cols. to Newark every day. Characterizing and typecasting Newark as a blue collar, working class town continues to override the actualities of 21st century life.

 

            And life in the 21st century is indeed becoming stranger and stranger. The Rev. Al Sharpton and his National Action Network are advocating a boycott of Kanye West. Seems North West’s daddy has embraced the stars and bars as his own (the rebel flag of the southern Confederacy – see “Civil War”, not necessarily Ken Burns). “I took the confederate flag and made it my flag. It’s my flag now.” (MSN Music News 11-12-13 Rev. Al Sharpton Leading Kanye West Boycott). In this day and age of branding and whose name is on your butt, one would be justified to wonder if that welder’s cap, that snot rag pulled out of a pocket, or that back window screen on a pickup truck is a genuine Kim Kardashian’s Kanye stars and bars, or just the same old tired KKK one. How will we ever know? How will we ever really know for sure? Flags, like words, are not always read the way they are written.

Income Disparity Part Two Or What Is Wrong With This Picture?

October 24, 2013

In the previous post (Income Disparity 10-20-13) Analysis took advantage of a perfect storm of news articles appearing in The Newark Advocate to understand how and why income disparity is as it is, with the middle class shrinking, and the lopsidedness vigorously continuing to grow. No attempt was made to critique what was being proposed re: the picture presented of vitalizing downtown Newark through subsidizing the developers. What if Liz Argyle and Steve Layman succeed with their intentions to create more residential housing units in downtown Newark? Will Steve or Liz move their families downtown to take advantage of these new urban living opportunities? Since Liz and Steve will probably not be relocating, what benefit will be promoted to attract tenants considering that 43% of Newark’s residential housing is already non-owner occupant? Why should someone choose to live in a retrofitted school house or next to a moldy abandoned jail rather than apartments or condo’s in other parts of town that are already within close proximity to restaurants, grocery stores, and shopping outlets; places that are open in the evening and weekends, when the tenants are home from work (ask Jerry McClain about downtown Newark during those times)? Will Mr. Layman and Mrs. Argyle primarily rely on tenants qualifying for government subsidized housing? How does that play with all those folks clamoring for less government (or no government) as well as less taxes (or no taxes) in order to grow our economy with less regulation and tax cuts for top earners (the job creators)? The picture of subsidizing more residential housing units through public assistance to the developers of such housing in a city that has one of the highest percentages of non-owner occupant residential housing in the state is ludicrous. It makes about as much sense as subsidizing the building of another gas station on a street that already has one on each corner.

In a previous post (Ohio Tax Credit 3-26-13) Analysis looked at what all goes into “developing” the farm land in places like New Albany, Rt 79 south of Heath, Pataskala, etc. Within that dynamic, the one embraced by the state’s JobsOhio and local CIC’s, there is a concerted effort to attract tenants on the part of multiple entities. The developers who purchased the farmland (by the acre) long ago for a song are only too willing to “build to suit” any new tenants (as this enhances the value of their speculative real estate investment). As that post points out, tenants moving into these industrial parks are given various tax cuts, credits and breaks, some as much as 100%! All this is touted as a win-win with developers (landlords) eager to get tenants along with the ensuing construction business for their subsidiary companies. Municipalities are eager for the commerce generated as well as taxing the workers enabling that commerce. Why isn’t this the model promoted for the vitalization of downtown Newark?

Perhaps because that model gives all the perks and benefits to the tenant, serves and values the tenants of these developments rather than the current one that puts landlords (developers) first. What about this for a picture: the city of Newark offers 100% municipal income tax breaks for those opting to commit to a 15 year residency in downtown Newark. As with Liz and Steve, the state could offer a 25% income tax break, with the federal government providing 20% off the prospective resident’s income taxes. Reason to move downtown, that’s for sure! Indeed, reason for current landlords to upgrade their properties, on their own (like their industrial park counterparts), through locally available financing . “The community’s wealth will be there when they are ready.” Downtown employees who relocate their residences would not only have more discretionary income to spend on downtown business (making for a resurgence) but would appreciate the time saved not driving to and from work, the health benefits of commuting on foot, and the money saved on vehicle expenses like gas and insurance. Many business owners who currently rent would look to own the buildings their offices are located in since they could use the home business tax credits for their second floor residences. Maybe Steve and Liz would choose to live downtown above their businesses. Impossible you say? If folks like Jay Hottinger can support and pass legislation creating all the incentives for corporate tenants in New Albany there is no reason it couldn’t be done for residential individuals in cities like Newark, Cleveland, Youngstown, Mansfield, etc. On the federal level, I’m certain Pat Tiberi would get lots of support from his colleagues who are the representatives of constituents in cities like Detroit, Gary, Cleveland, etc. If the potential residential tenants of downtown Newark were offered similar incentives as those of the industrial parks, venture capitalists would be only too eager to oblige with development. Demand creates supply is the model of capitalism that Christopher Columbus sailed on, isn’t it?

Brown Shirt-ism

October 14, 2013

            It is a difficult, and delicate, subject to write about; one that can be adumbrated but not specifically elaborated, one that could occupy a book in terms of research, reference and analysis. But there is no time for that. It is difficult, and delicate, to speak of because of the charged words involved. Language is all we have, yet many words become “icons”, designating meanings popularly attributed; some even to the point where they cannot be used but only referenced by their first letters. Historically, brown shirts referred to a certain kind of political strategy/activity in which a problem is created only to misdirect attention to the “other” (the opposition) as the source of the problem, and then claiming the problem’s (real) undisclosed perpetrator as the solution. This was very prevalent in many democratic countries throughout Europe in the 1930’s. The Hollywood version we are more familiar with revolves around some gangster type causing damage to a business or family, then claiming that the community, the civil authorities or municipal government is ineffective in “protecting” the business, and that the victims should put their trust (and payoffs) with the gangster for “protection”. How do you deal with it? If only Gary Cooper were still alive!

 

            The Sunday, October 13, 2013 Newark Advocate brought this to mind with a series of articles on the recent (and final) push by the North Fork School district to get a levy renewal passed on the November ballot. One of the articles claimed to assess the opposition and its legitimacy in the reasonable discourse. The reported story was disappointing in that it highlighted only what the opposition has already claimed (that the voters are without resources, vote no). The source of the campaign against the levy was spottily presented (specifically unmentioned), and primarily as being from outside the district.  “Fill” for the article was provided by all the compensatory statements by levy proponents (specifically mentioned, that is, named) trying to show the nameless opposition that various attempts already have been made to meet their demands. This, in addition to the other articles related to the necessity of the levy, was the “reasonable” reply – what has been done, what things cost, state requirements, etc. Analysis found nothing in the short Advocate article to learn what the opposition’s reasonable demand or alternative scenario could be, other than refusal to oblige the state mandated public school requirement to educate. We don’t wish to pay for public school education (and don’t wish to promote/support its funding on the state level) was about all that Analysis could glean as the opposition’s reasons (with “we don’t wish to be taxed” as the primary, fundamental logic further on upstream). No funding creates a problem for everyone.

 

            Heather Gerken, in an interview on Bill Moyers & Co, touched on the recent Supreme Court case, McCutcheon vs. FEC. The same folks who brought us Citizens United now want unlimited individual campaign contributions; unregulated as well with no disclosure requirements. She pointed out that the full disclosure and transparency route, which seems to be a reasonable foil to the corrupting influence of big money on political governance, is now the very tactic used to argue for why it should not be allowed. It is based on precedent Supreme Court implementation of disclosure and transparency restrictions in order to protect the first amendment rights of politically active participants from retribution and intimidation. Sunday’s events surrounding the WWII monument reinforce the strategy of brown shirts prior to that cataclysm. The government shutdown (which precipitated the monument’s closing) was brought about by the very folks who actively promote smaller or no government. Shutting down the government is precisely what they campaigned on in order to be elected. Bringing an end, or stop, to government, and its functions, be they in terms of education, business regulation, public health, social programs, etc. has always been their unambiguous and proclaimed intentions. With their short term success in hand (of shutting down the government) the leaders of this group now appear at the WWII monument blaming the “other” (their opposition) and promoting themselves as the solution (to a problem which they created). Those seeking the demise of the North Fork Schools are not far removed. “Let them fail” is their unifying intent. With that, they point to distractions like anecdotal evidence regarding private schools as solutions to public education. The private schools’ privilege of exclusivity now, somehow, becomes the route to universal, state-wide educational inclusivity. The Supreme Court Justices are buying this argument. Are you?

 

            One of the things Analysis regretfully did not bother to note this week was a short article that appeared online, saying that the real legislators at fault in Washington are the moderate Republicans for their refusal to stand up thereby giving tacit approval and support to the minority’s tactics. This is the same indictment history handed down with regard the destructive “success” of the brown shirts.

             

Our Representative Democracy In Action

October 1, 2013

            According to Jeremy Petzer, Northeast Ohio Media Group (9-19-13 and 9-25-13), Bill Seitz, state of Ohio legislator and representative of the people, is promoting Senate Bill 193, “making it easier for third parties to win ballot access and run candidates for office”. Amongst other things the bill requires minor parties to submit their qualifications (to run a candidate) 125 days before the election (as opposed to the previous 120 before the primary contest for that election). Also, previously to qualify for the presidential ticket, a party needed to show 5% of the total votes cast in the last presidential election. Under this bill it drops to 3%. Currently Ohio recognizes (for “other” reasons) 4 minor parties – the Socialist party, the Constitutional party, Libertarians and Greens. These can presently run candidates showing qualifications within the current 120 days before a primary. Reading the fine print of Senate Bill 193 reveals that it likewise “resets” Ohio’s minor party recognition. The 4 would no longer be recognized as viable third parties, requiring them, and any other potential third parties, to submit 56,000 signatures in addition to the previous mentioned conditions as well as the requisite 500 signatures to qualify for the governor’s ballot location. The bill has been dubbed the “John Kasich Re- election Protection Act” as a segment of the governor’s own party has been promoting the candidacy of Charlie Earl for governor in 2014. A Tea Party stalwart, he would be running on the Libertarian ticket. Gongwer News Service (9-30-13) has the bill set for a vote on Wednesday, October 2. Big of Mr. Seitz to want to expand our democratic process and enable more to participate, isn’t it?

Economics And Democracy II

September 28, 2013

            It was recently mentioned (Columbus On The Record 9-27-13) how the recent sales tax increase in Franklin County has met such public indifference. The same was said with regard to the state sales tax increase earlier this summer. A previous post pointed out the recent actuality of income distribution within the US; that 10 percent of the population account for 48 percent of the income, 90 percent for 52 percent of the income. That 90 percent in turn spends (consumes) most of its earnings. The economists’ critique is that this is not a “progressive” tax (based on wealth or actual dollars in hand), but a “regressive” tax (based on head count. If you dwell in the kingdom, you must pay the king’s tax collector). Whether regressive or progressive, according to Robert Reich, the tax is a rule or regulation that our democracy formulated in order to institute an economy. The outcome (or consequences) of that tax IS our economy. Formulate it differently (through the democratic process) and you arrive at a different economy. Currently, just such thinking dominates the national headlines with one group of our legislative representatives threatening to inflict damage on the entire country’s economy if the rules are not to their liking. Of course, changing those rules, according to Mr. Reich, is what makes for an economy. Indifference follows this entire scenario, much as it does central Ohio’s tax increases. One could speculate that we, as a people, have become so inured (desensitized) to the aesthetics and strategies of terrorism over the last 20 years that we simply have incorporated its approach into our everyday. Mr. Reich was upbeat about economics, knowing that in a democracy a difference could be made.  A 9-27-13 Wall Street Journal article materializes Reich’s economics approach while at the same time questioning our “democracy”. In The Hidden Biotech Provision in Budget Showdown, Alicia Mundy states: “Tucked into the House version of the bill that would have funded the government—in addition to the high-profile language designed to defund the health-care law—was an overlooked provision dubbed the Monsanto Protection Act by critics. Supported by the genetically modified food industry and Monsanto Co., the Farmer Assurance Provision would allow farmers to grow genetically modified crops even if a court had blocked their use. It was first passed into law as part of the 2012 Senate-House agreement that kept the government running that time around. More recently, it was inserted into the stop-gap funding bill that Republicans in the House passed Sept. 20.” Outcry has been made that although the various practices that brought the near total meltdown of the financial sector in 2008 were illegal at most, unethical at least, no upper level executives or managers have been prosecuted. In a famous 60 Minutes interview, the reasoning given by the head Federal Justice Department prosecutor was that it would have threatened the national economy. What Reich promotes seems to make the prosecutor’s rationale quite legitimate and necessary; pass laws (which were passed) that allow a practice while a court of law blocks that practice makes it incredibly difficult to know what is illegal, let alone enforce a rule, form an economy. At the end of her article, Alicia Mundy exposes why Reich may not have been so upbeat and positive had Bill Moyers asked him how he felt about democracy. Mundy writes: “The rider isn’t likely to resurface in any continuing resolution this year, said a Republican House aide. “The rider is toxic,” he said.  No one in the House wants to claim it as their own, he said.” A representative democracy legislating laws, rules and regulation authored by anonymous legislators produces the kind of economy we now find ourselves roiling in.

Economics And Democracy

September 24, 2013

            Jamie Dimon’s Chase bank will be letting go over 400 workers in the Columbus area. Less than ten years ago the business was championed (and received public subsidies) for bringing jobs to the Columbus area. The folks out of work might say what so many others have said before them, “All my life I’ve played by the rules, gone to school, served my country, got a job and now I find myself out of work, on the verge of losing my house (if not already), without health insurance and scrapping to just get by.” We’ve heard the same over, and over, and over for how many years now? Jamie, of course, has not only survived the London Whale debacle (over $2 Bil loss plus $920 Mil fine), the Wall Street meltdown 5 years ago, and the illegal robo-signing and marketing of toxic mortgages (and the resultant foreclosures which earned Chase even greater profits through derivative credit default swaps) but Jamie also received a bonus. American Microsoft is buying Finnish Nokia. According to many economists, inevitable! Microsoft is sitting on a pile of cash. As long as it is spent overseas (and not brought home), no tax is due. All of this is in perfect accord with “the rules” that the workers without a job played by so assiduously. How is this possible?

 

            Bill Moyers had Robert Reich on over the weekend. No judgmental good guy/ bad guy for his tenure as treasury secretary under the Clinton presidency will be pursued here (a digression that would NOT contribute to what is at stake today). Mr. Reich was on to promote his new movie (of all things!), Inequality For All, a didactic documentary. The film is a primer on the interface of “economics” (the great inscrutable mystery that determines all our lives) and “democracy” (our government, or at least what we’d like to believe is how we govern ourselves). Put simplistically, according to the current University of California public policy professor the economy IS the rules put into play by society through its own governance. In our case, unlike a monarchy or totalitarian regime, it is the rules formulated through the determinations of the democratic process. What we have today is the outcome of laws, rules and regulations implemented before, during and after Reich’s service to the president and country in the 1990’s. Chase, Dimon, Microsoft, etc. all are doing what is allowed, even promoted, by the “rules” put into play over the last 40 years. It would be “irrational” for them to do otherwise. Through all the gloom and doom Mr. Reich is upbeat, positive, downright hopeful. This is because he believes that, in a democracy, we can likewise change the rules and thereby change the economy.  How does this work?

 

            Two recent news articles cut to the chase. They are current, relevant, and interface precisely with contemporary efforts to deal with the economy through the democratic process. Prior to passage of the Patient Protection and Affordable Care Act, there were numerous television and film documentaries regarding health care in the US, other countries in the world, and the economics involved. There were images of long lines of infirm people in North Carolina, Tennessee, etc. for donated health care who hadn’t been to a doctor. We had accounts of hospitals, and physician organizations saying something must be done as health care cost are rising at (some years) double the inflation rate. The cost of health care is making it unavailable, where in other countries it is less costly and accessible, etc. Suffice to say, all this was a motivating factor for passage of the ACA. The ACA has been in place now for going on three years, and has passed constitutional muster. In an article entitled “CBO: We Have a Tax Problem, Not a Spending Problem” Nicole Woo of the Wall Street Cheat Sheet (9-23-13) reports: “The non-partisan Congressional Budget Office has released its 2013 Long-Term Budget Outlook, and it has some great news. Specifically, CBO is predicting substantially lower healthcare spending this year and 25 years into the future. While last year CBO estimated that, “Federal spending for those [health care] programs would grow to 9.6 percent of GDP in 2037; in that year, 6.0 percent of GDP would be devoted to Medicare, and 3.6 percent would be spent on Medicaid, CHIP, and the exchange subsidies.”” In online Forbes (9-24-13) “Health spending slows as Obamacare sign-up looms” by contributor Bruce Japsen “Health care spending continues to slow as more medical care moves to less costly outpatient settings, consumers choose cheaper generic drugs and insurance companies alter plan designs to increase out-of-pocket costs on workers, a new Health Care Cost Institute study shows.

The Health Care Cost Institute, which analyzes claims from major U.S. health plans, said the growth rate of health care spending in 2012 “remained low” for the third straight year for nearly 156 million Americans 65 years old and under with employer-sponsored coverage, growing just four percent. The health spending rate grew 4.1 percent in 2011, the institute said.

The institute’s report is the latest to show spending on medical care slowing. A report last week from the Centers for Medicare & Medicaid Services that was published in the journal Health Affairs said low rates of health care spending would continue through 2013. Both studies come as states and the federal government prepare to rollout broader coverage for uninsured individuals under the Affordable Care Act.” The article ends with, “ The independent nonprofit institute [the Health Care Cost Institute], which bills itself as nonpartisan, is supported by investor-owned health insurers Aetna, Humana, and UnitedHealth Group and the California-based nonprofit health insurer, Kaiser Permanente.” Nicole Woo adds this contextual insight: “CBO specifies that The American Taxpayer Relief Act of 2012 (which made permanent most of the Bush tax cuts and indexed the Alternative Minimum Tax to inflation) as the cause for the bulk of the decrease in taxes. As a result, it lowers its estimates of federal revenues a portion of our economy. ”Federal revenues are now expected to be substantially lower in coming decades. By 2023, revenues are projected to be 2.8 percent of GDP lower than projected in the 2012 analysis: 18.5 percent of GDP rather than 21.3 percent. Revenues are now projected to equal 19.7 percent of GDP in 2038, 4.2 percentage points lower than the 23.9 percent figure projected last year.”

By lowering its projections of future spending levels as well, CBO shows that we have a tax problem, not a spending problem. “Non-interest spending in 2038 is projected to be 1.4 percent of GDP lower than in the 2012 analysis. Total federal spending on everything other than major health care programs, Social Security, and net interest is now projected to equal a smaller share of GDP throughout the next 25 years than CBO projected last year.”

In addition, CBO quantifies how high unemployment rates do damage to the economy (and, by extension, future debt levels). “CBO raised its projection of the unemployment rate over the long term from 5.0 percent to 5.3 percent. That change in the long-term unemployment rate reduced CBO’s projection of the level of GDP by about 0.6 percent after 2027.”” This is the same Budget Office that our “democratically” elected representatives pay to inform them regarding economic policy decisions.

           

Robert Reich is right to be hopeful about the economy. Of course, Bill Moyers never asked the public policy professor how he felt about democracy in America.

 

Economics Is A SNAP

September 15, 2013

            You get up in the morning and it is drizzling. The night before the 11 o’clock news didn’t forecast any rain. Tonight’s news the weatherman will give an explanation for why it rained today and will or won’t tomorrow. Then again, he may choose not to even mention last night’s forecast. Gas prices in Newark are about the same. The Nigerian Oil Minister stubbed his toe, so the prices must go up. Today oil is trading at over $105 a barrel yet Newark gas prices are around $3.30 a gallon. During the fall, competition with heating oil production was always cited as a reason for raising prices. If we’re lucky, we get an explanation from economists. Stock quotes run the same. Projections say this or that figures or earnings reports are due out. The Fed has spoken and stocks go up or down. Recently, after the stocks went down when the reports were up, an explanation was given, “the market was disappointed with consumer spending.” Like the weather, the price of oil and the stock market, it all must just be too much for any central Ohio resident to fathom. In an article entitled “Income gains for 1% break records” (CBS/AP/ September 10, 2013) it is reported that “The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. Last year, the incomes of the top 1 percent rose nearly 20 percent, compared with a 1 percent increase for the remaining 99 percent. The share held by the top 10 percent of earners last year reached a record 48.2 percent.” Analysis questions what or with whom the market was disappointed. Was it with the 90% of Americans who earn 52% of the income? Did they not “consume enough”, spend enough with their consumption? Or was it with the 10% of Americans who earn 48% of the income? Are they not consuming 48% of what is needed to make the economy the dynamo of success that the market demands? It gets complicated when one realizes that the 90% who take in 52% of the earned income probably don’t get much of it from capital returns in the market itself. The 10% that earn 48% probably do. Which all begs the question who is disappointed in whom? If the market is disappointed in the lackluster pace of consumer spending could it be that it is really the 10% that are disappointed in the other 90% for not helping them earn an even greater share of the country’s earned income? Our leaders tend to feel it is the latter. If only we put even more money into the pockets of the 10%, they will in turn invest in making us all better off. Someone with more bathrooms in their house than bedrooms and kitchens and rec rooms combined will obviously be “consuming” more. Common sense will still tell us that an individual, whether rich or poor, can only dump so much, so often, in one day. There’s a limit to how much they can contribute. And that’s the part that the great wizard behind the curtain doesn’t want the “consuming” 90% to consider. It is called surplus, what is over and above what can be “consumed” and hence is invested or saved. The 90% saves little, for they consume most. The 10% can’t consume it all. Much gets “invested”. All investments are not created equal. 9-13-13 Bill Moyers’ guest Dave Zirin states “I live ten minutes away from a horrific slum with mold and ventilation problems and rats. Alex Rodriguez owns the slum. It’s called Newport Ventures. And this has become a big local story in Washington D.C. that Alex Rodriguez owns this horrific building. I mean, so the guy has made $350 million in his career.” Money makes money. If money is disappointed with the returns, it finds ways of making more money. Not all of them are in the public interest. Some are just in the interest of making more money (and not being disappointed).

            Speaking of disappointment, the Newark Advocate ran an article in its 9-15-13 edition entitled “Food stamp recipients facing tougher rules.” Yes, it was insightful in how things are about to change. The online comments for the most part perpetuated the myth that SNAP recipients were mostly spending it on pop and potato chips and just couldn’t wait to get up in the middle of the day so they could go out and swipe their cards for more. No mention was made of the farm bill, and the other subsidies that are abused, to the tune of even more dollars spent on fewer “corporate” individuals (the same ones who lobby to include soda and chips as part of the SNAP program). “The Department of Agriculture paid out $20.3 million more than it should have last year to farmers and other aid recipients, according to a new report released Wednesday by the USDA’s inspector general. As members of Congress return from their recess and prepare to head to conference over a 2013 farm bill, establishing policy for farm subsidies among other agriculture-related policies, they confront news that the USDA sent out more money than it should have for subsidies and that other farmer assistance rose by 67 percent in 2012. In comparison, overpayments totaled $11.7 million in 2011, according to the IG’s report, which tallied only “high-dollar overpayments.” For an incident to make it into the report, the USDA had to pay out 50 percent more than it should have and the amount of overpayment had to be a minimum of $5,000 per person of $25,000 per entity. In one example, the IG says the USDA made two payments of $45,096 each as part of a Farm Service Agency program when the payments should have each totaled $2,048. But the biggest overpayments were made to recipients of subsidies provided through USDA’s Federal Crop Insurance Corporation, according to a breakdown of the dollar amounts included in the report. The USDA spent $7.149 billion in fiscal year 2012 to subsidize the crop insurance premiums that farmers pay.” Maybe the Advocate didn’t bother to mention the inspector general’s report carried on multiple sites because Licking County and central Ohio is the heart of agriculture. I used the quotes from BILL TOMSON’s 9/4/13 Politico article entitled “Feds overpaid farmers by $20 million The USDA paid 50 percent more than it should have.” In conjunction with this it is important to note that today is the anniversary of the collapse of Lehman Brothers in 2008. This was an opportune time for our governor to look about for new employment, as he wore a Lehman Brothers uniform suit at the time. Various sources cite the US government bailout as being close to $250 million. It is also reported that most of that money has been repaid. The executives of companies like Bank of America, Goldman Saks, Chase, etc. can pride themselves with ads on how they’ve succeeded (as well as given themselves bonuses) thanks to a little help from “our” government (The Supreme Court Citizen’s United ruling now includes them in the “our”.). But the thousands of folks who have turned their lives around thanks to SNAP and other public assistance programs can’t afford to “pride themselves” with ads giving witness to their contributions to our economy and the quality of life in America. Instead, they find themselves shackled with the servitude of wasting public money through addiction to pop and chips. In light of the inspector general’s findings, The Newark Advocate could have earnestly anticipated this mythical response by providing some context. The enormous subsidies given to a limited number of individual corporations that account for overpayments offset the small percentage of abuse found within the SNAP program.

 

Some Assembly Required

September 8, 2013

            We’ve all been to some sport match from another culture or time, or maybe a theater performance, even a new board game with friends. “What are they doing and why” immediately springs to mind as well as what is a “yellow card”, or “icing”, or a “contralto.” The one who owns the language owns the game. With the Patient Protection (yes, that’s part of it) and Affordable Care Act, we need to hop in as participants, some of us without ever having played the game.

 

            In central Ohio it is difficult, if not impossible, to hold a job without owning a vehicle (public transportation is not of the caliber that would permit anyone who relied on it the accuracy of appearing at work, on time, everyday). The state of Ohio requires insurance for the use of such a vehicle on the roads we all share in common. To pay for this “coverage”, the “policy” requires a “premium” to be paid (monthly, quarterly, half year, etc.). The premium is what the policy will cost the person insured (the rent). The policy is the contract that spells out what the buyer (policy holder, the insured) is obligated to, what the seller (the insurer, the provider) is obligated to, etc. Lots of fine print and more terms! All of which spell out the “coverage”, what is included and what is specifically not included. Health insurance differs from property insurance (car, boat, home). Although AFLAC may make it look simple with a cute duck, it can be quite convoluted because of the uniqueness of individuals and what it takes to make/keep them healthy (side effects may include, but are not limited to, death and dying). With health insurance, as with property insurance, there can be a deductible. This is the initial amount of the cost of any claim which the buyer (the insured) agrees to pay. A claim is when something that is covered by the policy occurs and the policy holder (the insured) “claims” that under the terms of the policy, the insurance provider now needs to do their part and pay the amount owed to cover the costs. If an operation costs a total of 10K, and everything involved with that 10K billing falls under the coverage that my policy provides for, then my claim will be for the entire 10K. If the policy I contracted has a 1K deductible. Then 9K would be paid. If the operation cost 1K or less, I could not file a claim because my policy stipulates that I have agreed to pay the first 1K of whatever occurs. The amount of the premium for a policy reflects the amount of deductible; the greater the deductible, the lower the cost (premium) of purchasing that policy (having that coverage). Confusion swirls around the term “co-payment”. Health insurance coverage is a business to earn a profit for the company. No different than Walmart or Home Depot, if the company can provide its own transportation, products or services through its subsidiaries, then it will. The subsidiaries contribute to the money making endeavor of the parent company. A co-pay is money the insured must pay per each doctor’s visit, therapy session, or pharmacy purchase, etc. Like a deductible, it is the upfront amount agreed to with whatever coverage is purchased. It differs from a deductible in that it is not part of an overall “claim” but rather it is ongoing care (akin to repair of a vehicle after an accident and the regular routine service required continuously). A health insurance company may have subsidiary health care providers, thereby allowing them to offer a lower premium but requiring that the insured utilize the services of those subsidiaries with a specified co-payment for each use. The Patient Protection and Affordable Care Act is centered on health insurance exchanges or markets. Like a farmer’s market, the various businesses which wish to offer coverage within the parameters of the ACA (Affordable Care Act)  list the policies they offer, what each policy covers, what the terms of the coverage are (what’s included, not included, deductibles, co pays, etc.) as well commitments (on the part of the insurer as well as the insured). The ACA has grouped coverage into 4 categories so that it is easier to compare like with like. The categories have been described as bronze, silver, gold and platinum (or catastrophic). Essentially, the bronze has the highest deductible with the catastrophic having none. The bronze should be at the lowest “cost”, with the catastrophic the most expensive. The premium amount of any policy with any of the categories depends on the coverage spelled out in the individual policies offered by the different insurers. A single insurer could offer several different policies within the silver category. One policy may involve using the insurer’s subsidiary health care provider, another may allow the insured to choose whatever source, etc. The premiums on these different products (the policies with their coverage differences) will likewise differ although they will qualify as havng the characteristics of all silver policies (in terms of deductibles, etc.). The enrollment period is the window of time in which a policy is purchased, modified or changed. As coverage is for only a year, during the enrollment period the insured as well as insurer can decide to renew or make a change. The final term which has been part of business but rarely indicated is “subsidy.” Several years ago it was brought to this writer’s attention that the Swiss government pays a subsidy to the inhabitants of the quaint little villages and farms in the high altitudes of the alps. Yodeling aside, having the cheese, mountain climbing, skiing, etc. associated with “Switzerland” is incredibly important to the Swiss identity, to tourism, maintaining the “quality” of Swiss products, etc. But no one really wants to live up there isolated and cut off with bad satellite reception and no Seven Elevens. And if they have kids, they likewise want them to go to college, be soccer stars, etc. It is hard to play soccer on the side of a mountain. So the government assists these folks with a “subsidy”, a payment that helps insure that the mountain lifestyle continues to benefit all Swiss. In the US this is part and parcel of our agriculture policy (since being able to eat is essential to national security). The bank bailout instituted at the end of the Bush presidency was described as a subsidy, as well as payments to schools, manufacturers of nationally vital products, energy producers, etc. (in fact most CIC’s can be described as subsidies since payment is made for the ultimate benefit of the community served).  It’s there, unseen, but essential in making sure that America has the benefits of these endeavors, at a cost the individual consumer can afford. The ACA likewise has a built in subsidy. This is the portion of the health insurance premium that the government will reimburse the provider. The amount of the subsidy varies with the income level of the insured. It is likewise paid either directly to the insurer providing the coverage or credited to the income tax of the insured. So the same policy offered to two different income level purchasers will involve a different cost for each.

 

            The ACA only, and exclusively, operates through an online exchange — meaning one has to have access to the internet to obtain health insurance. The Licking County library offers access to the internet on computers available to its card holders. According to the Newark computer desk librarian, no formal policy has yet been established with regard the ACA. The 9-8-13 Newark Advocate article (Exchange 101: The basics of the new health insurance marketplaces) discusses health insurance navigators, and likewise (as this blog has done) points out that the Ohio legislature has chosen to officially license and recognize a limited number. The librarians at the computer desk will assist with the operation of the computers, accessing the internet and interacting with any programs but they cannot assist with anything pertaining to the ACA. They are NOT health insurance navigators. The application to obtain a library card (in order to use the computers) requires personal identification such as a photo ID or two pieces of mail addressed to the applicant, etc. The card is issued immediately, along with a pin that grants access to the terminals. There is a 2 hour limit on each use. Notify the computer desk librarian if you are unfamiliar with the use of a computer and are applying for health insurance; this will allow for more time. This is all happening at healthcare.gov where we will meet next time.