President Obama signs the health care bill into law at the White House on March 23, 2010. (Photo: Charles Dharapak, AP)Obamacare is in trouble, a victim of its own complexity.
Enacted in 2010 as a 2,700 page bill, the law called for the creation of more than 150 new federal boards, commissions, panels and programs. It has spawned more than 20,000 additional pages of regulation so far—and that’s after only three years of an eight-year implementation schedule. Welcome to the future!
There’s a reason for this mind-numbing complexity: Obamacare is the boldest attempt at government central planning in American history. The law gives federal officials power over all major decisions in American health care: what kind of health plans, benefits and levels of coverage Americans must buy; what is permissible for insurers in terms of administrative costs, profit levels, or premiums; what’s acceptable as preventive care; what benefits business owners, religious organizations and charities must offer; how states must run their new, untested health insurance exchanges… the list goes on and on, including new mandates and hundreds of billions of dollars in new taxes and fees—not to mention fines and penalties for noncompliance.
In the era of Obamacare, what you want in health care is irrelevant; you will get what government officials tell you that you must have. This is classic central planning. And history teaches us that central planning on this large a scale is doomed to fail.
Official Washington already is struggling with the economics of this monster. Last year, Health and Human Services (HHS) Secretary Katherine Sebelius announced her department could not implement the long-term care component of Obamacare. Financially, she said, it was simply not workable. And just this month Sebelius announced that she was postponing a program designed to allow small businesses to offer more than one plan for their workers. Meanwhile, more than half the states have declined to set up a ‘health insurance exchange” under the burdensome terms and conditions of the law, leaving it to Washington to do it for them.
Enrollment starts on October 1, 2013. But can Washington figure out how to do it without a monumental managerial mess?
Henry Chao, an HHS official involved with implementing the health insurance exchanges, says he is hoping that in setting up and enrolling millions of Americans in the exchanges that we all don’t have a “Third World Experience.” That may turn out to be an even bigger insult to the Third World than Chao intended.
Bet on more excuses. “We need more time” is the ultimate bureaucratic plea (edging out even “not enough money,” “not enough staff” and “the software doesn’t work right”). But time is not the real issue here. Indeed the problems that HHS is trying to tackle will become even more complex with the passage of time, making future planning and implementation even more difficult. The problem is that central planning in any complex sector of the economy is unworkable—a lesson that Washington progressives either cannot or will not learn.
And, yes, look for Obamacare apologists to launch the blame game. It’s always somebody else’s fault. None of this would be happening if the governors would just be more compliant, if the doctors would enroll in obedience school, or if the people would just stop squawking and accept what the bureaucrats are jamming down their throats.
But the progressives miscalculated the politics as well as the economics of Obamacare. In the run up to passage, poll after poll showed the proposal losing in the court of popular opinion. But the president and his allies in Congress did not care. They knew what was good for us, and they were determined to give it to us—whether we liked it or not. And so, they passed a purely partisan bill, chock full of broken promises, with the full support of big corporate lobbyists whose clients gained greater access to taxpayers’ money.
Three years on, the polls show Obamacare remains a loser. And lawmakers who created this monstrosity are getting as nervous as Dr. Frankenstein. Distancing themselves from the implementation, they are using words like “train wreck” (Sen. Max Baucus, D-Mont.) and “ beyond comprehension” (Sen. Jay Rockefeller, D-WV).
Perhaps blaming the bureaucrats may yet prove a successful strategy. But in passing Obamacare, it was the lawmakers themselves who guaranteed higher costs, massive disruption of Americans’ existing insurance coverage, and a level of federal intervention into health care decisions that is unprecedented. And they own it – all of it.
-Robert E. Moffit Ph.D is a senior fellow at the Heritage Foundation and a co-author of ‘Why Obamacare is Wrong for America.’
First appeared in The Blaze.
A celebrity-driven PSA that’s been making the rounds on television and subscription services like Hulu urges Americans to stuff Easter baskets this Sunday with toys — rather than the traditional high-sugar, high-fat candies like chocolate bunnies. The ad presents itself as a campaign to “save the bunny” while encouraging parents to shift away from giving kids the unhealthy treats.
Watch it:
It’s worth noting that the project is sponsored by Mattel, Fisher-Price, and various other toy-makers, and the campaign’s webpage directs visitors to retailers that sell their products, so there is an obvious financial motive at play here.
However, while candy consumed on one day out of the year is a mere drop in the bucket compared to other factors feeding into America’s obesity crisis, such as the over-consumption of fast foods and unhealthy school lunches, the empirical data suggests that there is some merit to the movement. Figures compiled by online retailers and the National Confectioners’ Association show that Americans purchase 120 million pounds of Easter candy annually — and the vast majority of it is particularly unhealthy foods like chocolate:
Holidays in general are a gold mine for chocolate makers — particularly for corporate giants Hershey and Mars, the two companies that produce 70 percent of all chocolate. Hershey’s webpage is currently pushing chocolate products such as the aforementioned bunnies, Cadbury cream eggs, and a variety of other sugary concoctions for Easter Sunday. Most chocolate products in the U.S. are actually made up mostly of Monsanto-produced corn.
Over at Investors.com, Jed Graham ran the numbers on Rep. Paul Ryan’s (R-WI) new budget for the House GOP, and found that by 2023, it would drive all government spending that isn’t either Social Security or interest on the debt to its lowest level since 1948. On every other occasion in the last 60 years that this category of spending dipped that low, unemployment was never over 4.5 percent — it’s currently at 7.7 percent.
Graham found, “the entirety of federal spending outside of Social Security and interest on the debt (16.4 percent of GDP in 2012) would shrink to 11.2 percent of GDP” by 2023, “a level not seen since 1948.” In fact, the situation is even worse, since in 1948 this spending did not yet include “ObamaCare, Medicare, Medicaid, NASA, the interstate highway system” or a host of other needed programs now in operation:
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In fact, if Medicare is discounted as well as Social Security and interest payments, spending shrinks to 7.9 percent in 2023, the lowest levels for that slice since 1938.
This is tiresome and grossly irresponsible, but hardly surprising. Ryan’s previous budget would’ve shoved non-defense discretionary spending — which includes most of the government’s investments in economic growth, veterans’ health care, food safety, drug safety, consumer product safety, federal law enforcement, and more — to 2.1 percent of GDP. Since 1962, the first year for which we have comprehensive data, non-defense discretionary spending has never dropped below 3.2 percent of spending.
Nonetheless, Ryan’s latest budget once again aims for the 2.1 percent mark by 2023, leading Michael Linden at the Center for American Progress to dismiss it as fantasy. “[I]t’s is far easier to ‘cut’ the nebulous category called ‘nondefense discretionary’ than it is to cut actual programs, benefits, and protections that the public knows and likes,” Linden writes. “But in fact, for these kinds of cuts to actually come to pass, Congress — now and in the future — will have to get specific. And if they decide that they can’t, in reality, reduce these things to levels unheard of in generations, then Rep. Ryan’s claim to a balanced budget falls apart.”
Sure enough, American voters only support cutting spending when it’s vaguely referred to as “spending.” Name specific programs, and public support for cutting them utterly collapses.
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On March 11, 2011, the Fukushima Daiichi nuclear power plant north of Tokyo was hit by a wall of water 43 feet high that destroyed or disabled enough equipment to cause three reactors to melt down.
Two years later, the people of Japan are bouncing back. The nuclear industry, not so much.
The United States has not (yet) built a new nuclear reactor since 1996 — new U.S. nuclear capacity has essentially flatlined. The U.S. still has far more nuclear power generation than any other country, though China, Russia, India, and Korea are actively constructing new reactors. A few U.S. building permits have trickled in since 2007, when an energy bill with incentives for new nuclear plants passed Congress. The Wall Street Journal reported in December that:
The first newly licensed nuclear-power plant to be built in the U.S. in decades, the Vogtle project in Georgia, has run into construction problems and may be falling years behind schedule, according to an engineering expert advising the state.
Nuclear power may continue to be a small wedge of our energy pie, but it is still not going to be more than a small wedge of the solution to human-caused climate change. Here’s why.
COST
A new nuclear reactor will set you back a cool $10 billion or more. The Department of Energy is promoting a plan to build as many as 50 small modular reactors per year starting in 2040. Constructed in factories, these reactors would cost “only” $3-5 billion each.
But before they even get to building a new reactor, the nuclear industry has relied upon about ten times as much in federal subsidies compared to those reluctantly offered to renewable energy developers. This is important to keep in mind as the industry complains about wind energy subsidies lowering electricity prices.
One of the arguments the nuclear industry has made over the last several decades is that though it is expensive right now, once the industry learns how to construct plants again, the financial structure changes as costs drop. This appears to be the opposite of true: Nuclear power has a negative learning curve.
Average and min/max reactor construction costs per year of completion date for US and France versus cumulative capacity completed.
Nuclear power has always been very expensive, and will continue to be staggeringly so, especially if we are to build in safety and redundancy measures needed to avoid future Fukushimas.
SAFETY
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Japan faces combined clean up and compensation costs at Fukushima estimated to reach $500 billion. The timeline for decommissioning the ruined plant is 30-40 years. There is a $6 million robot deployed to inspect the damaged hallways that got lost in the plant and has not been seen for 17 months. And the cost estimates are just guesswork:
Cleaning up the mess will mean total demolition of the four damaged reactor facilities and disposal of the nuclear waste in a yet-to-be determined site, an end-game likely to face opposition from potential host communities.
Japan has rejected the “sarcophagus” option used at Chernobyl, where the damaged reactor was encased in a massive concrete envelope. This is partly because of the difficulty of monitoring an entombed facility to ensure safety, said Kentaro Funaki, director of the industry ministry’s office in charge of decommissioning.
Estimates for total costs are mostly guesswork. “Only God knows,” said Chuo University’s Annen.
Whatever the final bill, Japanese consumers are likely to end up paying much of it, either through taxes, higher electricity rates or both, even as Japan’s government struggles with massive public debt and the costs of an ageing population.
If you ask the Nuclear Regulatory Commission about the safety record of U.S. reactors (as the Associated Press did), they would say “the performance is quite good.” Only five out of 104 reactors had safety issues at the end of the year. However, a Union of Concerned Scientists report found that during the whole year, 40 out of the 104 had at least one serious safety incident. This map shows you the locations of 12 reactors that almost melted down in 2012.
Are U.S. reactors learning from the Fukushima accident? Not really:
Even before the new rules are completely in place, the NRC is considering a new regulation related to the Japan disaster: requiring nuclear operators to spend tens of millions of dollars to install filtered vents at two dozen reactors.
NRC staff recommended the filters as a way to prevent radioactive particles from escaping into the atmosphere after a core meltdown. The filters are required in Japan and throughout much of Europe, but U.S. utilities say they are unnecessary and expensive.
The Nuclear Energy Institute said filters may work in some situations, but not all. … “We’re not against filtering. It’s how you achieve it,” said Marvin Fertel, the group’s president and CEO. …
“It’s not the time to be rash with hasty new rules, especially when the NRC has added 40-plus ‘safety enhancements’ ” to its initial requirements following the Japan disaster, said Sen. David Vitter, R-La., senior Republican on the Senate Environment and Public Works Committee.
Emissions
The only reason people consider nuclear as an alternative to fossil fuels is due to relatively low lifecycle emissions. Greenhouse gas emissions from nuclear energy are low enough to be in the range of many other renewable forms of electricity generation. Their emissions occur not during electricity production, but through everything else required to commission and decommission a nuclear plant: “plant construction, operation, uranium mining and milling, and plant decommissioning.”
The problem is you couldn’t build the reactors fast enough to make a difference. Even prior to the disaster at the Fukushima reactor, nuclear power was never a climate cure-all as we reported back in 2007: If the world built about 2 nuclear plants each month for 50 years — along with some 10 Yucca Mountains to store the waste – nuclear power would still be under one-tenth of the solution to global warming.”
Those numbers make clear nuclear power will not be a large piece of the pie in lowering emissions to stabilize below 450ppm.
Waste
The availability and security of nuclear waste storage are unresolved problems. The courts have decided that the executive branch and the states need to resolve the issue of where to put the waste, and all they appear to have concluded in three decades is “not in Nevada.”
The issue of where to put the growing national pile of nuclear waste (2,000 tons a year in spent fuel alone) is unlikely to be resolved in the next three decades. Whatever the solution ultimately is, it won’t come cheap.
What do proponents say about waste concerns? “Blah, blah, blah.”
Water
One nuclear reactor uses 35-65 million litres of water each day. Large mounts of water are also used in the uranium mining process.
Two plants in Georgia use more water than all the water used by people living in Atlanta, Augusta and Savannah combined.
* * *
Climate hawks have always had an ambivalent relationship with electricity powered by nuclear fission, primarily because, while it is low-carbon, it is so damn expensive. So although we have a hundred or so plants in the U.S. that will be with us for the foreseeable future, it is much more cost-effective to continue to promote and rely on truly clean, cost-effective renewable energy and energy efficiency.
jQuery(document).ready(function(){jQuery('#comment_submit').click(function(){if(jQuery('#comment_check:checked').lengthObamacare is in trouble, a victim of its own complexity.
Enacted in 2010 as a 2,700 page bill, the law called for the creation of more than 150 new federal boards, commissions, panels and programs. It has spawned more than 20,000 additional pages of regulation so far—and that’s after only three years of an eight-year implementation schedule. Welcome to the future!
There’s a reason for this mind-numbing complexity: Obamacare is the boldest attempt at government central planning in American history. The law gives federal officials power over all major decisions in American health care: what kind of health plans, benefits and levels of coverage Americans must buy; what is permissible for insurers in terms of administrative costs, profit levels, or premiums; what’s acceptable as preventive care; what benefits business owners, religious organizations and charities must offer; how states must run their new, untested health insurance exchanges… the list goes on and on, including new mandates and hundreds of billions of dollars in new taxes and fees—not to mention fines and penalties for noncompliance.
In the era of Obamacare, what you want in health care is irrelevant; you will get what government officials tell you that you must have. This is classic central planning. And history teaches us that central planning on this large a scale is doomed to fail.
Official Washington already is struggling with the economics of this monster. Last year, Health and Human Services (HHS) Secretary Katherine Sebelius announced her department could not implement the long-term care component of Obamacare. Financially, she said, it was simply not workable. And just this month Sebelius announced that she was postponing a program designed to allow small businesses to offer more than one plan for their workers. Meanwhile, more than half the states have declined to set up a ‘health insurance exchange” under the burdensome terms and conditions of the law, leaving it to Washington to do it for them.
Enrollment starts on October 1, 2013. But can Washington figure out how to do it without a monumental managerial mess?
Henry Chao, an HHS official involved with implementing the health insurance exchanges, says he is hoping that in setting up and enrolling millions of Americans in the exchanges that we all don’t have a “Third World Experience.” That may turn out to be an even bigger insult to the Third World than Chao intended.
Bet on more excuses. “We need more time” is the ultimate bureaucratic plea (edging out even “not enough money,” “not enough staff” and “the software doesn’t work right”). But time is not the real issue here. Indeed the problems that HHS is trying to tackle will become even more complex with the passage of time, making future planning and implementation even more difficult. The problem is that central planning in any complex sector of the economy is unworkable—a lesson that Washington progressives either cannot or will not learn.
And, yes, look for Obamacare apologists to launch the blame game. It’s always somebody else’s fault. None of this would be happening if the governors would just be more compliant, if the doctors would enroll in obedience school, or if the people would just stop squawking and accept what the bureaucrats are jamming down their throats.
But the progressives miscalculated the politics as well as the economics of Obamacare. In the run up to passage, poll after poll showed the proposal losing in the court of popular opinion. But the president and his allies in Congress did not care. They knew what was good for us, and they were determined to give it to us—whether we liked it or not. And so, they passed a purely partisan bill, chock full of broken promises, with the full support of big corporate lobbyists whose clients gained greater access to taxpayers’ money.
Three years on, the polls show Obamacare remains a loser. And lawmakers who created this monstrosity are getting as nervous as Dr. Frankenstein. Distancing themselves from the implementation, they are using words like “train wreck” (Sen. Max Baucus, D-Mont.) and “ beyond comprehension” (Sen. Jay Rockefeller, D-WV).
Perhaps blaming the bureaucrats may yet prove a successful strategy. But in passing Obamacare, it was the lawmakers themselves who guaranteed higher costs, massive disruption of Americans’ existing insurance coverage, and a level of federal intervention into health care decisions that is unprecedented. And they own it – all of it.
-Robert E. Moffit Ph.D is a senior fellow at the Heritage Foundation and a co-author of ‘Why Obamacare is Wrong for America.’
First appeared in The Blaze.
Former Sen. Chris Dodd (D-CT)Former U.S. Sen. Chris Dodd (D-CT) ended his presidential campaign in January 2008, after a weak showing in the Iowa caucuses. More than five years later, the largely-paralyzed Federal Election Commission (FEC) has fined his long-defunct campaign $42,000 for failure to properly report campaign contributions. Because Dodd’s campaign was one of eight 2008 presidential committees to take public matching funds, it agreed to an automatic audit of campaign fundraising. That routine investigation — completed in April 2012 — found that Dodd’s campaign failed to report $764,966 in gross receipts. The matter was then referred for possible enforcement action. Nearly a year later, the Dodd 2008 campaign and the FEC signed a conciliation agreement in January. The commission accepted the agreement and make it public on Friday — more than two years after Dodd retired from public life.
Meredith McGehee, policy director at the non-partisan Campaign Legal Center, told ThinkProgress that the delayed and weak action by the FEC “shows what a joke they’ve become… They’re picking on a campaign that was incredibly unsuccessful. The candidate is no longer in office. It’s kind of like going after the mosquitoes when the room is full of lions and tigers and bears. Mosquitoes are bad, you want to get rid of them, but what does it matter if you’re being eaten by the lion, the tiger, or the bear?”
The five-year lag time, she noted, is a result of under-funding by Congress. “They just don’t have enough resources to do this is what most people would consider an effective way.” That lack of effective enforcement sends a signal to other political committees that they have little to fear if they fail to accurately report their own finances. “A lot of the effective enforcement is done when people see that there is enforcement, they self-enforce. When they don’t see enforcement, they don’t self-enforce, say ‘let’s roll the dice.’ When you win your election, the fine is just the cost of doing business.”
Audits from the 2000 campaign were mostly completed within two years. But a number of new FEC policies, instituted since, have further slowed the process. With the sequestration likely to force spending cuts at the FEC, it remains to be seen whether the three 2012 campaigns that accepted matching funds will have their audits completed by 2017.
Chris Dodd for President’s end of 2012 report showed the committee with about $18,000 in the bank. There is little forcing it to actually pay the fine and raising money for failed campaigns after the fact can be incredibly difficult — former Sen. John Glenn (D-OH) spent 23 years paying of the campaign debt from his 1984 campaign.
In addition to paying a $42,000 fine, the conciliation agreement stipulates that Dodd 2008 will “cease and desist” from violating disclosure laws going forward.
President Obama signs the health care bill into law at the White House on March 23, 2010. (Photo: Charles Dharapak, AP)
In the wake of conservative Justice Antonin Scalia’s claim that a key provision of the Voting Rights Act amounts to a “perpetuation of racial entitlement,” former President Bill Clinton offered a very different vision of the law in an exclusive statement emailed to ThinkProgress today:
The Voting Rights Act is one of the most powerful tools Americans have to fight injustice, and its protection is fundamental to our democracy. Since the Act’s enactment in 1965, disciplined, systematic efforts to undermine its safeguards by disenfranchising younger, poorer, minority, and disabled voters—some even more determined today than they were 48 years ago—are reminding us of the fragility of this very precious right. As America becomes younger, more diverse, and more vibrant, our response must be to embrace our common humanity, to widen the circle of opportunity, and to build a country where every American has a voice in the future—a voice that our vote provides and our government must protect. This is not the time to weaken those protections, but rather an opportunity to redouble our efforts to affirm them.
President Clinton previously described efforts by Republican governors and lawmakers to undermine voting rights the most determined effort to restrict the franchise ” since we got rid of the poll tax and all the other Jim Crow burdens on voting.”
Unemployment is likely to remain above 6 percent for at least three more years, Federal Reserve Chairman Ben Bernanke said during testimony in front of the House Financial Services Committee today. Responding to questions from Rep. Michael Fitzpatrick (R-PA), Bernanke said a “reasonable guess” for when unemployment will finally come down to 6 percent is 2016:
FITZPATRICK: The Fed has indicated it believes long-term unemployment rates will settle at around 5.2 percent or 6 percent.
BERNANKE: That’s our best guess.
FITZPATRICK: An understanding I heard your testimony earlier about predicting the future. When would you say we might get to around 6 percent? And also, the American people, they believe natural unemployment is actually much lower than that given what we experienced in the 1990s. Maybe your suggestion as to how we address that expectation.
BERNANKE: Again, it’s hard to predict. But a reasonable guess for 6 percent would be around 2016.
Watch it:
That unemployment remains high and will continue to do so for at least three more years would seem yet another argument against sequestration, the automatic budget cuts that will begin taking effect Friday. Indeed, Bernanke was outspoken in his opposition to further fiscal contraction during his testimony, repeatedly saying the budget cuts could damage the economic recovery and that the Federal Reserve, which has been acting to stimulate the economy through monetary means for months, could use help from Congress.
Instead of offering that help, Congress remains focused on deficit reduction, even as evidence mounts that the only spending problem America has right now is that the government isn’t spending enough. But Republicans have repeatedly blocked efforts to further stimulate the economy, choosing instead to push spending cuts that have held back the recovery. The looming round of cuts will only make that worse: the Congressional Budget Office projects that sequestration will knock 0.6 percentage point off economic growth while resulting in the loss of more than 700,000 jobs.
The golden years are supposed to be a time when you can live off the wealth you've accumulated over a lifetime, not feel like you have to take on more debt to make ends meet.
But a new batch of research shows that Americans ages 75 and over appear to have grown more burdened by debt in recent years, and experts say a likely culprit is medical expenses.
A new analysis of government data, released earlier this month by the Employee Benefit Research Institute, found that between 2007 and 2010 people who are 75 and older were more likely to have debt, and their average debt levels increased significantly.
That's in stark contrast to other older Americans in their 50s and 60s, who generally saw debt levels stabilize during that period.
In general, the good news is that people ages 75 and older are much less likely to have debt, and generally carry far less debt, than other older Americans. But Craig Copeland, a senior research associate with EBRI and the report's author, said it was still troubling to see that the trend for that group was toward increasing, rather than decreasing, debt burdens.
"It really looked like something wasn't going well for them," Copeland said.
He suspects that many Americans who are 75 and older have few options but to take on debt when a big unexpected expense arises, because many are living on fixed retirement incomes and don't work. That means they can't, say, work a few extra hours or take on a second job if they need to pay for something.
That unexpected expense may be health-related. Although most older Americans are covered by Medicare, Copeland noted that many are still on the hook for co-pays and other out-of-pocket expenses.
That means a person with a limited income can have their finances thrown into disarray by one unexpected event, such as a broken hip that requires significant co-pays or the sudden need for a very expensive prescription that isn't fully covered.
"In a lot of cases it seems to be that health care is a particularly vexing issue," he said.
The percentage of people 75 and above who had debt grew from 31.2 percent in 2007, the year the nation went into recession, to 38.5 percent in 2010, a year after the recession officially ended, according to the EBRI's analysis of Census data. The average amount of debt for those with debt also more than doubled, from $13,665 in 2007 to $27,409 in 2010.
The debt loads were far greater for people in their 50s and 60s, but the trend lines were far less troubling. The percentage of people ages 55 to 64 who held debt fell from 81.7 percent to 77.6 percent. For people ages 65 to 74, the percentage holding debt held steady at about 65 percent.
The average debt for 55- to 64-year-old debtholders fell from $112,075 in 2007 to $107,060 in 2010. For people ages 65 to 74, average debt fell from $72,922 in 2007 to $70,875 in 2010.
It makes sense for younger people to have more debt because they are still paying off big expenses, like houses, and they also are more likely to be bringing home a paycheck. By the time you reach your mid-70s, many would expect to have paid off the house and retired from regular work.
For people 75 and older, Copeland said his research showed that both median credit card and housing debt increased for those who had those types of debt.
Lucia Dunn, an economist at The Ohio State University, said her more recent research also has shown that older Americans have been taking on more credit card debt in recent years. She also suspects that unexpected medical expenses are a key problem for that group.
But in general, she said the really troubling finding she's seeing is that younger Americans appear to be taking on more debt than previous generations, and paying it off at slower rates.
That could mean that today's young people have even bigger problems than their parents and grandparents when they reach age 75 and older.
"The elderly are taking it in (but) not as fast as the younger ones," she said. "The really young cohorts are really digging a hole for themselves."
In 2011, U.S. corporations paid a 12.1 percent effective corporate income tax rate, a 40-year low. The statutory corporate tax rate is 35 percent, but companies drive their rates fare lower due to the proliferation of loopholes and deductions and the growing use of offshore tax havens.
This isn’t a new problem, as Goldman Sachs’ David Kostin shows. In fact, corporations have been paying below the statutory rate for 45 years (the chart uses 39 percent due to its inclusion of state corporate taxes):
For the last 45 years, the median S&P 500 firm has paid an effective tax rate averaging more than 5 percentage points below the statutory rate. Despite statutory rates hovering near 39% for the last 25 years, effective tax rates have been gradually decreasing (see Exhibit 2). At 30%, the current S&P 500 median effective tax rate is almost 10 percentage points below the statutory level, and close to the global statutory average.
The corporate income tax is so riddled with holes that 26 major corporations paid nothing between 2008 and 2011, while making a collective $205 billion in profits. Democratic Sen. Carl Levin (MI) this week released a plan to raise $200 billion over ten years by closing corporate tax loopholes. (HT: Sam Ro)
During WWII, Winston Churchill famously opined that, “You can always count on the Americans to do the right thing---after they’ve tried everything else!” Today, those very words aptly describe U.S. policy towards Iran.
While engagement has only emboldened Tehran, and sanctions have proven to be insufficient, military action risks Armageddon. As the president begins his second term, he should be convinced that “everything else” has already been tried; it is now time to do “the right thing,” when it comes to Iran policy.
Last October’s, albeit belated, administration decision to remove the principal Iranian opposition movement, the Mujahedin-e Khalq (MEK), from an unjustified State Department blacklist -- was clearly the first step in the right direction.
As a Pentagon-funded report by the Federal Research Division of the Library of Congress noted in December, Tehran “considers the Mojahedin-e-Khalq to be the organization that most threatens the Islamic Republic of Iran.”
It is a measure of MEK’s influence and power that the mullahs consider the movement an existential threat and have vowed to annihilate its members at all costs. Epitomizing the best impulses of the Arab Spring, and embracing values all Americans cherish, MEK has proven itself to be a democratic ally worthy of our recognition as a player when it comes to the future of Iran.
MEK has provided the West with invaluable intelligence about Iran’s nuclear secrets: the uranium enrichment facility at Natanz and the heavy water facility in Arak (2002): the key nuclear research and development facility in Lavizan-Shian (2003); the Fordow underground enrichment facility near the holy city of Qom (2005); and other significant sites over the following years directly involved with nuclear weaponization.
For 15 years, the mullahs invoked the MEK’s FTO designation to shamefully justify extreme human rights violations of countless Iranian citizens. Similarly, at Tehran’s urging, the unwarranted designation was used by the Iraqi government to justify the murder and oppression of 3,400 Iranian dissidents, members of MEK, at Camp Ashraf and the reluctant relocation into prison-like conditions at Camp Liberty, near Baghdad.
Today, with prices rising and the value of the rial plunging, the Iranian economy is in shambles. The ruling clerical elite are increasingly fragmented and rapacious internal dissent makes the moment right for regime change. Despite dire risks, at every opportunity Iranians, particularly the young people, have taken to the streets to defy the mullahs’ tyranny and decry their lack of freedom.
This time, our government must actively support the people of Iran. The incoming Secretary of State, John Kerry, must see to it that the United Nations designates Camp Liberty as a “refugee camp” rather than a “transit camp.” The U.S. and the UN must remedy the consequences and effects of an antiquated MEK designation, by guaranteeing the rights of the exiled dissidents, and ensuring that their new status is recognized and upheld in Iraq.
Specifically, the Iraqi government must allow members of the Iranian Resistance to sell their property at Camp Ashraf without further obstruction, so that they can support themselves until they are safely relocated. US foreign policy interests are best served by the swift and safe resettlement of Camp Liberty residents to Europe and the U.S. This is an issue that many Iranian-Americans with relatives at Camp Liberty care deeply about.
Maryam Rajavi, the Resistance’s charismatic and courageous leader, has articulated a Ten-Point-Plan, which envisions an Iranian future based on a popularly elected government, separation of church and state, full equality for women and minorities, peace and friendship with all countries in the region, and a non-nuclear Iran.
How to deal with the desire of the Iranian people who are already intent on changing Iran from within is a challenge the next U.S. president will have to address if we are to deploy the most powerful weapon at our disposal to solve the Iranian nuclear threat, prevent Iran’s terrorist regime from dangerous regional domination, and most importantly to be on the right side of the history.
Kennedy represented Rhode Island’s 1st Congressional District in the U.S. House of Representatives, 1995-2011
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A new report from the analysis firm Fair Isaac Corp. provides one more piece of evidence confirming that student debt is out of control. According to the report, average student debt grew 58 percent between 2005 and 2012, leaving students buried under more than $27,000 each. Delinquencies, of course, rose along with the debt load:
The delinquency rate today on student loans that were originated from 2005-2007 is 12.4 percent. The comparable figure for student loans that were originated from 2010-2012 is 15.1 percent, representing an increase in the delinquency rate by nearly 22 percent.
While the delinquency rate is climbing, the average amount of student loan debt is increasing even faster. In 2005, the average U.S. student loan debt was $17,233. By 2012, it had ballooned to more than $27,253 – an increase of 58 percent in seven years. By contrast, the average credit card balance and the average balance on car loans owed by U.S. consumers actually decreased during the same period.
“This situation is simply unsustainable and we’re already suffering the consequences,” said Andrew Jennings, chief analytics officer of Fair Issac. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default.” This chart shows how student loan debt has outpaced other forms of debt:
“Our evaluation of credit risk patterns also reveals that high levels of student loan debt are now riskier than before,” the report said. (HT: Zero Hedge)
Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.
On January 24, 1963, exactly half a century ago, President John F. Kennedy called on Congress to enact a broad overhaul of the tax code. One of JFK’s boldest proposals was to close a giant tax loophole that allows wealthy people to escape taxes on capital gains — the appreciation in value of stocks, businesses, or other investments — by holding onto assets until death and passing them onto heirs.
Though JFK’s successor, Lyndon Johnson, pushed through much of the Kennedy tax program in 1964, the tax break on inherited capital gains survived. It exists to this day as one of the largest loopholes in the tax code.
The provision is sometimes called the “angel of death loophole” or, in tax-speak, the “stepup in basis at death.” Here is how it works: Let’s say an investor buys stock for $1,000 and over time it shoots up in value to $100,000. If the investor sells that stock, he’ll owe capital gains taxes on the amount it has gone up.
But if the investor holds onto the stock his whole life and bequeaths it to his heirs, the $99,000 of gain is never subject to capital gains tax. The heirs inherit the stock with what’s called a “stepped-up basis,” which means that if they sell the stock at some point, they’ll only owe capital gains tax on any gain above $100,000.
The inherited capital gains loophole has major effects on the budget, on the economy, and on tax fairness. It results in about half of all capital gains going permanently untaxed. It costs the U.S. Treasury an estimated $50 billion per year (perhaps more). It encourages people to hold onto assets even when they would otherwise want to sell them. And since capital gains are highly concentrated at the top end of the income scale, it undermines progressivity.
One of the arguments for maintaining the inherited capital gains tax break is that the estate tax provides a backstop, ensuring that large inheritances are taxed. But that argument holds less water now that the estate tax has been largely eviscerated.
In submitting his tax reform proposal to Congress, Kennedy emphasized that eliminating “the ability to avoid all capital gains taxed on assets held until death” would mean that more investors would choose “the most desirable investment[s],” not the most tax-favored ones. JFK’s proposal included a number of exceptions to address practical issues, including exempting the vast majority of people with only modest amounts of capital gains. Unfortunately, however, Congress left the loophole untouched, and subsequent efforts to address it have also come up short.
Fifty years later, Congress is again discussing tax reform, and though the inherited capital gains loophole is one of the largest tax breaks, it is rarely debated. But if Congress is committed to a balanced approach to our fiscal challenges, and serious about “base broadening” tax reform, it should revisit a half-century-old proposal that is more relevant than ever.
Four years before the accident at Japan’s Fukushima Daiichi plant, the U.S. Nuclear Regulatory Commission was warned about the possibility of a plant suffering simultaneous meltdowns due to a natural disaster. [NYTimes]
The accident at Japan’s Fukushima Daiichi plant in 2011 alerted the American nuclear industry and its regulators to the possibility that operators at plants with more than one reactor might have to deal with more than one meltdown at a time in a flood, earthquake or other catastrophe. Officials are now working to assure that they could master that situation.
But documents uncovered by a group that is critical of nuclear safety show that a high-level safety analyst at the Nuclear Regulatory Commission posed the possibility to his superiors in July 2007, about four years before the earthquake and tsunami that led to three simultaneous meltdowns at Fukushima Daiichi. The documents also show that in August 2008, the commission staff formally acknowledged the issue.
But until Japan’s disaster, progress in the American nuclear industry was glacial….
The warning, which now seems prophetic, predicted “common cause failures,’’ meaning single events that disable different pieces of equipment that are supposedly independent and nearly invulnerable to failing simultaneously on their own. The risk analyst, Richard Sherry, wrote that flooding or earthquakes could disrupt both normal grid power and emergency backup power.
China is trying to get a leg up on clean energy transportation by getting into the patent wars. The country has filed over 2,000 patent applications — 8 percent of the world’s total — placing China third globally. [ChinaDaily]
Greenpeace released a report yesterday warning of various fossil fuel projects around the world that could serve as “carbon bombs,” driving the planet still closer to disastrous levels of global warming. China and Australia topped the list. [The Guardian]
A global and legally-binding agreement to reduce mercury emissions was reached in Geneva over the weekend. But it still faces ratification by over 140 countries, even as studies show mercury levels around the world continue to rise. [LA Times]
The unusually cold temperatures across America’s northern Plains and New England could be due to a combination of a warming event in the upper atmosphere over the Arctic, and fluctuations in a natural cycle of tropical rainfall near the equator. [ClimateCentral]
Ikea will double its investment in renewable energy — including wind farms and solar parks — to $4 billion by 2020, as part of an effort to bring down costs for more cash-strapped consumers. [Bloomberg]
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The Centers for Disease Control and Prevention made it official on Friday: This year’s severe flu season is an epidemic . It passed the threshold last week, with 7.3 percent of deaths from influenza or pneumonia. Forty-seven states are now reporting widespread activity after the season got to an especially early start.
Vaccination remains the “best tool we have to prevent the flu,” and the best time to receive a vaccine is before the season even starts. Even so, well over half of Americans neglect to get their flu shots. With the season well underway, some areas are reporting vaccine shortages.
One interesting measurement of flu season trends is Google search data for flu-related terms, which has skyrocketed in recent weeks. But this chart from the CDC, showing hospital visitors with flu-like symptoms, might provide a more appropriate context:
by Peter Bronksi, via the Rocky Mountain Institute
It’s that time of year when people make New Year’s resolutions, commitments to do things differently in the coming year that are going to have a positive impact on their lives. But what would New Year’s resolutions look like if the United States as a nation resolved to decrease its fossil fuel consumption and increase the adoption of efficiency and renewables?
I sat down with program director James Newcomb and principal Lena Hansen to find out. They offered up four New Year’s resolutions that can help make the United States’ electricity system more efficient, more resilient, and more planet-friendly sooner than later.
1. Invest further in end-use efficiency.
Energy efficiency is often considered one of the cheapest and most readily available energy sources. Investments in efficiency programs have been increasing around the country, but significant opportunity remains on the table and many utilities are still incentivized to sell more electricity, rather than to sell more efficiency. Taking end-use efficiency to the next level will require utilities and consumers to work more closely together than ever before. Utilities especially can take several steps to make that happen: a) improve efficiency program marketing to truly engage customers and increase participation, b) streamline program transaction costs, such as by implementing faster and simpler energy audits, c) adopt regulatory mechanisms that remove utilities’ disincentives and create incentives to sell efficiency, and d) embrace collaboration with other stakeholders, including regulators, NGOs, auditors, customers, and architectural and engineering firms.
2. Anticipate and head off friction over solar.
As the cost of solar has come down in recent years (19 percent overall between 2011 and 2012 alone, ranging from 15 percent for residential solar up to 30 percent for utility solar) and new business models have emerged, solar is becoming cost competitive with grid-sourced electricity in an increasing number of locales. Meanwhile, the amount of installed solar continues to grow. (According to the Solar Energy Industries Association, the U.S. now has more than 6,400MW of installed solar electric capacity, enough to power more than 1 million average American homes.) These trends are set to continue, and as they do, there’s likely to be increased conflict between utilities, solar companies, and customers. Utilities, regulators, and solar companies need to come together now to dialogue and develop regulatory, business, and pricing models that will enable sustained growth for the solar market while still compensating utilities for the real and valuable grid services they provide.
3. Learn from 2012’s debilitating storms and make grid resilience a priority.
From devastating droughts in the Sahel and America to extreme flooding in Australia, from Western wildfires to Hurricane Isaac and Superstorm Sandy, 2012 was the year of debilitating storms and other weather and climate events that knocked out power for millions and millions of people. Such massive, widespread outages had very real and damaging impacts, from loss of life to billions of dollars lost. It is time to learn from those experiences and begin a genuine conversation about what it will take to fundamentally transform the grid’s architecture to make it inherently more resilient. The conversation must move beyond simply “hardening the grid” by trimming trees or installing expensive underground lines, which are more or less Band-Aids. A more decentralized electricity system—one built upon greater levels of rooftop solar, efficiency, electric vehicles, smart controls for customers, and more—has the potential to support greater resilience, but represents more fundamental and transformative change that must be thought through carefully.
4. Don’t think or act incrementally when it comes to long-term infrastructure.
The U.S. has been under-investing in its electricity system infrastructure for a long time. Even without the devastation caused by storms such as Sandy and the rebuilding that goes along with it, that system will require significant investment in 2013 and beyond. The Brattle Group estimates that the U.S. will need to invest up to $2 trillion in its electricity infrastructure by 2030, for example. But once such infrastructure investments are made, they’re there for decades. Let’s not make incremental investment decisions based on what we’ve always done; the status quo must go. Instead, we must be thoughtful, think systematically, and consider the best overall solution—not the best incremental Band-Aid—before acting. For example, is a new transmission line the best option, or could efficiency and distributed resources closer to the point of use meet the need? These are but four commitments of many the U.S. could make to improve its electricity system. And while the change will happen over the long term, the time to resolve to make that change—and take the first steps toward it—is today.
Peter Bronksi is the Editorial Director of the Rocky Mountain Institute. This piece was originally published at RMI’s Outlet Blog and was reprinted with permission.
jQuery(document).ready(function(){jQuery('#comment_submit').click(function(){if(jQuery('#comment_check:checked').lengthA Gallup poll released Wednesday showed that entering the new year, half of all Americans believe the country's best years are in the past. Republicans are particularly discouraged, with nearly three-quarters saying that America's peak came before 2013.
The survey found that while 50 percent say the country's best years have passed by, 47 percent believe that greater times are to come. There is a stark partisan divide, however: While just under seven in 10 Democrats agree that "the country's best years are ahead of us," 74 percent of Republicans say they have already elapsed. Independents are also pessimistic about the future, although less so — 55 percent say the country's best years have passed, while 43 percent say they are still ahead.
Those surveyed were also split on their predictions for 2013's economic outlook. Just one-third of respondents said 2013 would be a year of economic prosperity, while 65 percent said they expected economic difficulty. But at the same time, more than half — 53 percent — predicted a year of full or increasing employment. Just 42 percent said the economy would lose jobs in 2013.
"The 65 percent of Americans who predict 2013 will be a year of economic difficulty is one of the more negative responses to this question since Gallup first asked it in 1965," said Gallup's Frank Newport in a statement.
Americans surveyed before Tuesday's "fiscal cliff" deal also accurately predicted that taxes would rise in 2013, with 82 percent saying it was more likely they would rise than fall. A broad majority — 85 percent — also predicted the federal budget would not be balanced in 2013.
Americans also took a pessimistic look at American power, with three-quarters predicting a year of international discord and 57 percent saying the United States' global influence would wane. Those surveyed also see increasing violence at home, with 68 percent predicting a rise in crime rates.
"About two-thirds of Americans believe 2013 will be a year of rising crime rates, a more negative prediction than in either 1999 or 1998," Newport said. "Americans' views about crime this year were possibly affected by the tragic school shooting on Dec. 14 in Newtown, Conn., the day on which the current poll began."
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