Topic: Health Care & Welfare

Looking in the Wrong Places for Social Security Reform

Democratic Vice Presidential nominee Tim Kaine suggested in the debate last week that a Clinton administration would address Social Security’s unsustainable fiscal trajectory by “focusing primarily on the payroll tax cap,” increasing it substantially from its current ceiling of $118,500. Proposals along these lines portray raising the tax cap as a way to address the rapidly deteriorating fiscal health of the program by enacting a modest tweak that would simply return the program to the way it has always operated, and that this additional tax burden would fall solely on high-earners. However, the current cap is not significantly out of line with the program’s historical experience, and the U.S. has a relatively high taxable maximum compared to many peers. These factors, along with the resulting adverse economic consequences and the need for further increases in the future, illustrate why the focus on this aspect of reform is misplaced.

It’s certainly true that at some points in the program’s history, a significant portion of workers had earnings above the tax cap, but this was in the earlier years of the its operation when more than a quarter of workers were above it. Over the past 30 years this share of workers has fluctuated in a narrow band around 6 percent.

Looking at it another way, the percentage of total earnings that are subject to the tax was 82.7 percent in 2014. While this is slightly below the high point in the early 1980s, it is just below the average since 1950.

Percent of Total Earnings Subject to Tax

 

Source: Social Security Administration.

Obama’s Housing Toolkit: A Mixed Bag

Something striking happened last week: the Obama White House released its Housing Development Toolkit and Obama’s economic advisor, Jason Furman, wrote a follow-on op-ed about land use regulation’s negative consequences. While White House reports tend to be geared toward partisan political objectives, these two publications could have been written by non-partisan economists. Nevertheless, although the honest application of economic theory is welcome, libertarians will still find points of disagreement.

What’s good? The report highlights zoning policies’ influence on increasing housing prices, immobilizing workers in job deserts, creating costly uncertainty for developers, increasing inequality and racial segregation, and suppressing economic growth. These negative outcomes were attributed to “excessive barriers,” “unnecessarily slow permitting processes,” and “arbitrary or antiquated” zoning and land use regulations.

The White House even went so far as to say that “even well-intentioned land use policies” can have negative impacts. So far, so good.

What’s bad? The worst part of the report is the declaration that the President’s 2017 HUD budget includes a $300 million proposal for grants to help cities “modernize their housing regulatory approaches.” Since when does it cost $300 million to reduce regulation, which is all the “modernizing” that needs to be done?

Debating Universal Coverage with Norwegian Minister of Education and Research Torbjørn Isaksen

In this Norwegian documentary, former Conservative Party MP and Norway’s current Minister of Education and Research Torbjørn (“Thor Bear”) Røe Isaksen and I debate which provides a better guarantee of access to health care – government or a market system?

Washingtonians may recognize the locale: Bob & Edith’s Diner in Arlington, Virginia. 

A rough translation/transcript of the documentary is available here.

A Report on Urban Policy from DC’s Front Lines

A law-abiding resident has few options to protect herself, if she is luckless enough to live in the Nation’s Capital. This truth became abundantly clear this weekend, when a neighborhood drunk attempted to break into my apartment way past either of our bedtimes. Once the situation resolved, I became hell-bent on determining how someone in my circumstances should respond in case next time they fared less agreeably.

A cursory web search of DC urban policy was less-than-encouraging: in the Nation’s Capital, urban policy so markedly favors the assailant that the victim’s best tool in the event of an emergency seems to be something like practicing jujitsu moves in the corner while she runs the clock out.

Conventionally speaking, there are two options when you are assaulted; lethal or nonlethal resistance. Guns fall into the former category, but leaving the matter of D.C.’s gun laws aside – as bewildering as they are – the perhaps more asinine urban policies are those surrounding non-lethal deterrents.

Non-lethal deterrents include 1) self defense sprays (mace or pepper spray) and 2) tasers. If you’re a woman, don’t own a gun, and would like to protect yourself, your best option is probably a good self-defense spray, followed by a taser or knife, except that in D.C. all of these options are either sometimes or always illegal.

For self-defense sprays, this is because certain sprays do not meet the requirements the City Council has set forth, requirements like containing approved chemicals from a list, being labeled with “clearly written instructions for use, and dated with [their] anticipated useful life.” (Apparently, in a life-or-death situation you should be thinking about whether you’ve labeled your itty bitty mace keychain’s expiration date properly.)

City council members are also rarefied luddites, insisting that your self defense spray use an aerosol-propelled mechanism, rather than the more effective, recent innovations that use a incendiary charge to direct the spray, like the Kimber Pepperblaster.*

The Answer Is a New Government Program. What’s the Question?

The Sunday Washington Post had a long, hagiographic article about Senator Mark Warner’s critique about how capitalism “isn’t working” for the masses and his heroic attempts to fix it that left me thinking I’m in an alternate reality.

The problem he sees is that the growing tendency of people to change jobs throughout their career has left people unprepared for retirement, and that we need to do more to make sure that workers have some sort of safety net to provide them with health care and income in their golden years.

That this was largely addressed decades ago with the introduction of Social Security and Medicare was completely missing from the article. Social Security is an incredibly progressive retirement program that provides everyone with a work history of at least ten years with a decent-sized benefit that doesn’t go up all that much for wealthier people who contributed much more. And Medicare is the largest government program there is, covering hospitalization costs, basic health costs and drug benefits for tens of millions of senior citizens. The government spends about $1.5 trillion each year on these two programs, and they make up the majority of our federal budget. There’s also plenty of evidence that they prevent seniors from indigence: the poverty rate for seniors is well below that of other age groups. 

The current Administration also added an expensive entitlement that makes it much easier for people under age 65 who do not receive health insurance to obtain it, along with a healthy subsidy. For a family of four in Washington DC there is still a subsidy for an income of $80,000, which is well above the mean household income, and Medicaid completely covers those who don’t make enough money to buy their own health insurance. What more can we possibly do to make health insurance more affordable for the working poor?

How the FDA - And Other Agencies - Shape What You Read About Them

An important investigation by Charles Seife in Scientific American looks at how scientific newsmakers – in this case the U.S. Food and Drug Administration (FDA) – use “close-hold embargoes” to manipulate news coverage on breaking stories. Embargoes in themselves are a common enough practice in journalism; the special feature of a “close-hold” embargo is that it conditions a reporter’s access to a forthcoming story on not seeking comment from outside, that is to say independent or adversary, sources. 

The result of this kind of embargo, critics say, is to turn reporters into stenographers by ensuring that no expert outside perspective contrary to the newsmaker’s makes it into the crucial first round of coverage. And the FDA uses the technique to go further, according to Seife: it “cultivates a coterie of journalists whom it keeps in line with threats.” In fact, it even “deceives” disfavored major news organizations like Fox News “with half-truths to handicap them in their pursuit of a story.” 

The FDA has used this means of forestalling informed critical reaction on major, controversial regulations such as the recent “deeming” rule governing e-cigarettes and vaping. It also used the same technique in unveiling a major public health ad campaign – taking measures, as you might put it, to shape opinion about its shaping of opinion. An FDA official even upbraided a New York Times reporter who, unlike her colleagues, noted the close-hold embargo in her report. The agency resented its news-shaping methods becoming public. 

The whole article is a case study in how government-as-newsmaker - and by no means just the Food and Drug Administration - can get the coverage it wants.

Hillary’s Housing Policy Prescription

Yesterday, Hillary announced her latest policy prescription to increase low-cost housing: don’t hold your breath, it’s anything but original. The basic prescription is simply to double down on tax subsidies for housing developers. 

To that end, Hillary proposes enlarging the Low Income Housing Tax Credit (LIHTC) program and shifting the tax burden from housing developers and financial institutions back to taxpayers.

Here are a few reasons she should reconsider:

  1. The Low Income Housing Tax Credit program (hereafter “the subsidy”) crowds out market-provided low-cost housing. That means taxpayers are paying for low-cost housing that would otherwise be provided by the market for free.
  2. The IRS has proven entirely inept in its role as administrator of the subsidy. This is not a controversial point (the Government Accountability Office agrees).
  3. The subsidy has a highly fragmented, complex system of delivery, which means it is inefficient, and by extension, expensive.
  4. As a consequence, the subsidy doesn’t even stack up well against comparable housing subsidies: research describes the subsidy as 19-44% more expensive than comparable housing subsidies.
  5. To make matters worse, the subsidy is often not viable as a stand-alone. Forty percent or more of housing units receiving this subsidy end up utilizing other subsidies, while they’re at it.
  6. The subsidy is a tax expenditure and as such does not appear as an outlay on the federal budget. This means that Congress never has to confront any of the problems noted to this point.

Still unconvinced? Here are a few more reasons why expansions of the Low Income Housing Tax Credit program should be opposed.