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Posts published in “Trahant”

Impact of the fiscal yahoos

trahant MARK
TRAHANT

 
Austerity

The Fiscal Yahoo Caucus of the United States Congress is ready to reach into your family wallet and grab cash. Need to buy or refinance a house? Ca-ching. Owe anything on credit cards, perhaps a revolving business loan, or need student loans? Ca-ching. Ca-ching. Ca-ching.

This nonsense -- a refusal to raise the federal debt limit without all sorts of conditions -- matters to everyone because we as Americans borrow money at extraordinary low rates. We borrow a lot of money, actually, so even a small increase in interest rates could really hurt.

The General Accountability Office says: “Spending on net interest as a percentage of federal spending has fluctuated over time, peaking in the late 1940s and in the mid 1990s. In the past, interest payments contributed to deficits and helped fuel a rising debt burden. Rising debt, in turn, raised interest costs in the budget, and the federal government increased debt held by the public to finance these interest payments. This has been called the ‘vicious cycle.’ Today’s relatively lower interest rates have lessened the pressure debt service places on the budget, despite the recent increase in the debt held by the public.”

We have a good deal. Interest payments as a percentage of the total economy were at 14.6 percent in 1948; today that number is only 6.4 percent.

So what if interest payments were that high again? The wheels of government come off.

Remember that government debt is financed in public markets. That debt is sold at auction, so someone has to be a “buyer” of bonds. “Consequently, the amount that the federal government spends for interest on its debt is directly tied to those interest rates,” the GAO said. “Under CBO's January 2012 baseline budget projections, debt held by the public would be 62 percent of GDP in 2022 and spending on net interest would rise from $227 billion in 2011 to $624 billion (or 2.5 percent of GDP) in 2022. CBO has assessed how changes in interest rates can affect federal spending. CBO notes that if interest rates are 1 percent higher than the rates assumed in CBO’s baseline budget projections, the government’s higher interest costs would add nearly $1 trillion to the cumulative budget deficit over the 10-year period.” (more…)

Spy vs. Spy

trahant MARK
TRAHANT

 
Austerity

Watch out for fights coming from the Capitol. The Senate versus the House. Republicans opposed to Democrats. And, of course, the most intense battle, Republicans against Republicans.

I grew up with the Spy versus Spy comics from Mad Magazine. Week after week a white clad spy would deliver some sort of lethal device (think exploding toilets) to a black suited spy. The scenarios were always outlandish and neither character ever really won. It’s that way in DC right now, except most of spies in combat are wearing Republican Red.

The Spy versus SpySpy versus Spy battle is alive and well on Twitter where there’s a #dontblink campaign to try and convince those squishes to support the filibuster. It’s not going to happen, but it does increase the possibility of a government shutdown simply because Congress is running out of time to meet the October 1st deadline. (The Senate has rules about how much time is allowed for a debate after cloture.) That means any vote for a temporary budget to fund the government cannot occur until the end of the week, Friday or Saturday. Then it will go back to the House. Perhaps with changes. Senate Majority Leader Harry Reid will send a “clean” resolution to the House, hoping that body will pass it without changes just to keep the doors open. But probably not. Then the process will start again -- with the government officially closed. (On Tuesday, Senator Reid announced the measure will only fund the government until Nov. 15, leaving open the possibility of a regular order budget.)

This is as goofy as Spy versus Spy. And just like the comic strip, there’s no real winner in sight. The games just go on and on.

There is a bigger problem for Indian Country, however. Actually two issues. First, any “resolution” of this crisis is completely temporary. The same debate will surface again over the debt limit in a couple of weeks and then again when this Continuing Resolution expires. The House bill only pays for government operations until December 15. So, even if the Senate’s shorter version passes, the whole mess will repeat. (more…)

A storm is coming

trahant MARK
TRAHANT

 
Austerity

So where to begin? I put my column on hold this summer so that I could make my move to Anchorage (I am teaching for a year at the University of Alaska Anchorage, holding the Atwood Chair for journalism) and to work on a couple of other longer range projects. Labor Day is over and now it’s time to get back to work.

There remain lots of dull, policy stories that are not being written by anyone else. Meaty stuff. Before I took my break, for example, it was unclear whether Congress would appropriate federal money on time and if another government shut-down was on the way. Now that I am back: Who knows? Some in the Congress are willing to shut down the government to stop the implementation of the Affordable Care Act.

The only thing clear is that the Republican party is deeply divided on Capitol Hill.

A proposed Continuing Resolution had to be pulled from the House Wednesday because there wasn’t enough votes for that measure to pass. There is a bloc of members in the House and the Senate that will take about any step required to thwart the Affordable Care Act (or Obama Care, if you prefer). That means closing the government, refusing to pay the bills that Congress has already charged on the national credit card, and at the same time, destroying their own party’s leadership. As Politico put it: “The GOP is clearly struggling with itself over how best to keep the government operating and placate conservatives who want to cut off all funding for implementing Obama’s signature reforms.”

The problem is that no side has a majority. There are three distinct caucuses: Democrats, traditional Republicans and the new radical Republicans. None of those three groups has an easy way to win enough votes to win a majority.

Take the House: There is a natural governing coalition that could band together, Democrats with a few Republicans to make enough votes to pass a budget and basically keep the government humming. But the problem is that if Speaker John Boehner taps this coalition too often, then he’s toast. He’ll lose his job. He needs to keep a majority of Republicans happy. Even if that means chaos. (more…)

An era of limits and immigration reform

trahant MARK
TRAHANT

 
Austerity

The debate over immigration reform in the House and the Senate is an interesting lens to examine the future of austerity.

How so? Immigration is about immigration; secure borders, global migration pattens, and a path to citizenship for more than 11 million people living in the United States without a legal status. The Senate bill is a compromise that calls for an unprecedented buildup of border security, some 20,000 new agents, in exchange for that citizenship route. (Borrowing language from the Iraq war buildup, Senators are calling it a “surge.”)

Think about what that means: The United States can’t afford to invest in education, health, or infrastructure, but it can spend big bucks on border security. The Congressional Budget Office scores the cost side of the ledger in the Senate bill this way: “Appropriate $46.3 billion for expenses related to the security of the southern U.S. border and initial administrative costs.”

The Senate compromise also limits eleven million people’s right to participate in the health care system, while, at the same time, taxing them for services not rendered. This part of the bill is just mean. The CBO says “the net budgetary effect of decreasing the number of unauthorized residents would be relatively small—the small savings for Medicaid, child nutrition, and refundable tax credits would be more than offset by a slightly larger reduction in revenues paid by, or on behalf of, unauthorized residents.”

But at least the Senate bill is not all about costs. Despite what immigration critics say, historically immigration has always boosted the U.S. economy. (It’s not even a close call.) The CBO says the Senate bill would decrease the deficit by $158 billion in the next decade. That’s probably understating the economic benefit of moving undocumented workers from off-the-book jobs into the mainstream economy.

The House approach to immigration reform is to break apart the coalition of security in exchange for citizenship. Louisiana’s Rep. John Fleming said in The Hill newspaper that one reason Republicans oppose the Senate's immigration bill is because they don't trust President Obama to enforce the border enforcement provisions in that bill. (Even though Obama won’t be president when most of the law kicks in.) (more…)

Fixing the Great American Health Mistake

trahant MARK
TRAHANT

 
Austerity

The Obama administration’s decision last week to delay a mandate for large employers to provide health insurance or pay fine is both meaningless and significant.

It’s meaningless because it impacts such a small number of employers. Nearly all employers with more than 50 employees already provide health insurance. And those that do not, are unlikely to change course because of the penalty (even at $2,000 per full-time employee that costs far less than insurance).

But it’s significant because it highlights The Great American Health Care Mistake. This country should have never forged health care to work. It was an accident, a way to avoid wage controls during World War II. No other country in the world has such a crazy system. And it makes no sense to let our employers make decisions about our health care. All the basic stuff: What kind of coverage we buy, what should be covered, or even our provider networks and, therefore our doctors.

This mistake let Americans “pretend” that health insurance did not have a cost. It was a quiet part of our compensation, but because it’s not measured by the employee (although that will change soon), it wasn’t something we were willing to spend money on ourselves.

But employer-sponsored insurance is declining. It’s a trend that began before federal health care reform. The percentage of Americans who receive health insurance through employers dropped from 69.7 percent in 2000 to just 59.5 percent in 2011, according to a report by the Robert Wood Johnson Foundation.

And even when company insurance is offered, more employees are saying, “no thanks.” In 2000, 81.8 percent of employees who were offered coverage enrolled. A decade later, the Robert Wood Johnson Foundation study reported, only 76.3 percent did.

The reason for the decline in both employer and employee participation is simple: Insurance costs are out-of-sight. The study said the premium for employee-only coverage doubled from 2000 to 2011, increasing from $2,490 to $5,081. Family premiums went up by 125 percent, from $6,415 to $14,447, during the same time period.

Across the country, the Robert Wood Johnson Foundation study did not find a single state where employee-sponsored insurance actually increased, and 22 states saw decreases of 10 percent or more. (more…)

Voting in the name of

trahant MARK
TRAHANT

 
Austerity

The Supreme Court’s ruling last week on voting rights sends a simple and clear message: And now you do what they told ya.

The court basically said that modern states wouldn’t use their power to keep minorities -- including American Indians and Alaska Natives -- from voting. “Our country has changed, and while any racial discrimination in voting is too much, Congress must ensure that the legislation it passes to remedy that problem speaks to current conditions,” Chief Justice John Roberts wrote for the 5-to-4 majority.

And now you do what they told ya.

So in North Dakota, South Dakota, Arizona, Montana, and Alaska, and in many other states where access to voting is limited, where polling booths are located far from reservation communities, or where “early voting” hours are made purposely unequal or unfair, well, the court said, in Shelby County (the Alabama county that sued to end the Voting Rights Act) “voter turnout and registration rates now approach parity.”

And now you do what they told ya.

But of course that parity is not found in Indian Country. The last election was a success, however, American Indians and Alaska Natives still have the lowest registration rates of any racial or ethnic group. A study by Demos a couple of years ago pegged that number at 5 to 14 percent lower than the general population. I suspect the numbers are not much better two years later because Indian Country is growing so fast; nearly 200,000 American Indians and Alaska Natives are eligible to vote since the last election.

And now you do what they told ya.

In her dissent, Justice Ruth Bader Ginsberg, says the court’s majority is wrong because “the ‘blight of racial discrimination in voting’ continued to ‘infec[t] the electoral process in parts of our country.’ Early attempts to cope with this vile infection resembled battling the Hydra. Whenever one form of voting discrimination was identified and prohibited, others sprang up in its place.”

And now you do what they told ya. (more…)

Walking into deflation

trahant MARK
TRAHANT

 
Austerity

You would think that the broader economy would be part of any discussion about austerity. If the economy is getting stronger, well, then government budget cuts are more easily absorbed. On the other hand, if the economy is fragile, then budget cuts make it worse because the government itself is such an important part of the economy.

So government as an engine of growth -- something that is absolutely a fact in Indian Country -- is rarely considered by conservatives in the political context. Unless it’s about Defense-related jobs.

A study last month, for example, said the Pentagon could manage the sequester far more effectively if it permanently cut its civilian workforce by tens of thousands of jobs. But Congress doesn’t like that idea and is hostile to closing more bases as a way to save money. One Virginia Republican is proposing legislation that, according to Government Executive magazine, would “prohibit the department from proposing, planning or initiating another round of Base Realignment and Closure.”

But when it comes to the economy, especially long term, the choices of where government invests money is important to growth. Just think what it would mean if education spending had the same sort of passion from Congress as the military with specific legislation that prohibited the closing of a school or university. (Or even better: laws requiring full funding.)

One power the government does have to invest in economy, save an economy, or just meddle in an economy (depending on your point of view). But it is that role that the government last week hinted that it is backing away from. Federal Reserve Chairman Ben Bernanke has been using extraordinary tools to do what it could to prop up the economy without support from Congress. As Paul Krugman wrote in The New York Times yesterday: “For the most part, Ben Bernanke and his colleagues at the Federal Reserve have been good guys in these troubled economic times. They have tried to boost the economy even as most of Washington seemingly either forgot about the jobless, or decided that the best way to cure unemployment was to intensify the suffering of the unemployed.” Krugman’s conclusion is that it’s the “wrong signal to be sending given the state of the economy. We’re still very much living through what amounts to a low-grade depression — and the Fed’s bad messaging reduces the chances that we’re going to exit that depression any time soon.”

Other economic observers fear an even bigger problem, deflation. Ambrose Evans-Pritchard, a European columnist in The Telegraph wrote: “I hope the Fed knows what it is doing.” He points out that a tighter monetary policy makes less sense when the core inflation metric is lower now than when the Fed began using its powers. “America is one shock away from a slide into outright deflation, and the eurozone is half a shock away.”

We live inflation. We go to the store and it costs more for our basic supplies, food, gas, even sending children to college. Then the deal was we would get a bigger pay check to make up for these increasing costs.

But that has not been happening. And if you look at the larger economy, inflation itself has been extraordinary low. For its part, the Fed says it is still watching this trend. One Federal Reserve Bank president told Bloomberg News that if inflation remains low, despite what Bernanke said, the Fed might need to find a way to “provide more accommodation.” (more…)

Big data in Indian country

trahant MARK
TRAHANT

 
Austerity

The 21st century is a world where data - bits of information about what we do, what we say, and how we spend money - has become as important as the story narrative. It’s hard to make any kind of case with a story alone. You need facts to back up your account. You need details. You need numbers.

Right now, of course, big data is a hot story all by itself. The Guardian newspaper broke the story about how the National Security Agency has developed a powerful tool for collecting and analyzing billions of bits of information. The newspaper cited an NSA fact sheet saying this is a tool that “allows users to select a country on a map and view the metadata volume and select details about the collections against that country."

In this map, countries with scant data are green and countries where lots of electronic spying is occurring, such as Iran, are red.

The collection of private communication is a serious issue, one that in a democracy requires a vigorous debate. But the second I saw this map, I was reminded yet again that Indian Country has a different kind of data problem. There is too little reliable, timely information.

If Indian Country were to show up on the NSA’s data heat map we would be the brightest green zone on the planet.
In an era of austerity this lack of data has serious consequences. Quick: What’s the unemployment rate in Indian Country? Has it gone up or down since the sequester? What’s the actual number for furloughs? How about our spending patterns? I could go on and on.

The honest answer to every one of these questions has to be a “don’t know.” A year ago the Bureau of Indian Affairs reported that it would not release a 2010 Indian Population and Labor Force Report because “of methodology inconsistencies.” Donald E. Laverdure, acting Assistant Secretary -- Indian Affairs, wrote July 2, 2012, that the “collected data from those 2010 methods did not adequately meet the standards of quality and reliability that are required of Federal agencies in reporting official statistics.”

In a rare data driven document, the Economic Policy Institute released its picture of American Indian and Alaska Native unemployment finding that the national unemployment rate did jump during the recession from 2007 to the first half of 2010, and increased 7.7 percentage points to 15.2%. That same year EPI reported the “unemployment rate for Alaska Natives jumped 6.3 percentage points to 21.3, the highest regional unemployment rate for American Indians.” (more…)

Summer of irregular order

trahant MARK
TRAHANT

 
Austerity

House Majority Leader Eric Cantor, R-Virginia, has outlined his congressional agenda for this summer. “We have a busy month ahead of us and July will be just as busy, with our continued focus on making life work for Americans through our conservative solutions,” Cantor wrote to members of the Republican caucus. “During that stretch, members should expect a number of important issues to reach the house floor, including: the continuation of the appropriations process ...”

This summer’s budget conclusion -- at least from Cantor’s point of view -- is “regular order” for Appropriations bills for fiscal year 2014 and some sort of resolution of the debt limit.

The key message for Indian Country and the programs that serve American Indians and Alaska Natives is the House Fiscal Year 2014 budget will based on the Budget Control Act, the law that gave us the sequester. So, Cantor wrote, “the overall spending level contained in the twelve appropriations bills is written to the sequester-level of $967 billon.”

First, it’s interesting that Cantor would again pledge “regular order.” He’s saying the House would pass its budget and appropriations bills and the Senate would do the same. Then a conference committee between the two legislative bodies would negotiate the differences until common ground is found.

But it’s misleading at best. Regular order has not happened on the budget. The House, so far, has refused to appoint members to a conference committee with the Senate instead insisting on a “pre-conference” negotiation. An editorial in The New York Times said the House actually prefers chaos to regular order. “Clearly, what is frustrating Republicans is that they do not have an imminent crisis to exploit to get their way,” the editorial said. “Since 2011, they have repeatedly relied on the threat of a government shutdown, or a possible credit default, to force damaging spending cuts. (That is how the sequester was created.)”

So even though the process of regular order is not working for the budget -- the big picture review of federal spending -- it is supposed to work for the individual appropriations bills that write checks agency by agency. Let me be clear about this: A regular order on appropriations would be a good thing for Indian Country. There are many friends in the House that could use that process to improve spending on at least key programs, such as health and education. (Remembering of course that the overall budget is somewhere between irresponsible and awful.) At the same time -- and in a contrary move -- the overall Appropriations process will be worse because House Republicans want more money for Defense and to pay for that they will look to cut more domestic spending.

It will be up to the Senate to say no.

Unfortunately this situation won’t change until after the next election. Because it’s not only the Senate that can say no. Republicans are in a position to halt any new spending, or even a lifting of the sequester itself. South Dakota Sen. John Thune recently told The Washington Post, “I don’t anticipate that the sequester gets turned off. That to me is one of the few areas where we actually have cut spending.” He’s the number three ranking Republican in the Senate so his views are reflective. (more…)