May 26, 2018

Single-Payer Health Care in California: Here’s What It Would Take

About half that sum could come from existing Medicare and Medicaid dollars, according to the analysis. What employees and employers currently spend would cover another $100 billion to $150 billion. But the remaining $50 billion to $100 billion would require new taxes — such as a 15 percent payroll tax on earned income.

A separate analysis put the bill’s cost at $331 million, accounting for savings achieved through efficiencies and preventive care, among other things. Whatever the figure, even supporters concede that it would require a higher sales tax and increased taxes on large businesses.

Ardent proponents, like the California Nurses Association, are undeterred. “It really is about the political will,” said Catherine Kennedy, a longtime nurse who lives in Carmichael, outside of Sacramento. “We can find the money.”

‘Single payer’ has no single definition.

Democrats overwhelmingly favor single-payer plans in polls, but the phrase means different things to different people. To some, “single payer” is just a way of saying coverage for everyone. To others, it means eliminating the profit motive from health care. Or it represents simplicity — an end to paperwork, deductibles, co-payments and preapprovals.

“I do support a single-payer system,” said Steven Cohen, a retired engineer, who lives with his wife, Terri, a retired schoolteacher, in Valencia. Even though he is on Medicare, Mr. Cohen, 71, said a recent switch in his medication for rheumatoid arthritis caused his out-of-pocket drug costs to rise sharply. The insurance and pharmaceutical industries now have too much clout, he said.

When asked if he would still support single-payer if it meant higher taxes, however, Mr. Cohen said no: “Raising taxes to offset the cost of health insurance is not the best approach.” And he is unwilling to trade his Medicare coverage for a state-based version, “unless it changes for the better.”

A nationwide Kaiser Permanente survey last September found similar sentiments. A majority favored the idea of a single-payer national health plan. But when those surveyed were told that the role of employers in health care would be ended, that governmental control would grow, or that people would have to trade in their existing coverage, support fell below 40 percent.

Article source: https://www.nytimes.com/2018/05/25/business/economy/california-single-payer.html?partner=rss&emc=rss

Tax Break, or Kickback? Energy Benefit Becomes a Lightning Rod

“The whole purpose of the tax deduction was to incentivize owners, and our situation as a governmental entity is no different from Apple or any other corporate entity,” Philip Aldridge, vice chancellor for business development at the University of Texas, said. The University of Texas System and the University of Houston System have filed a lawsuit arguing that they were misled into transferring incentives worth millions of dollars without compensation.

“We own the building, we financed 100 percent of the building, and we, as the owner, determined whether the building was going to be energy efficient or not,” Mr. Aldridge said.

Jonathan Duchac, an associate professor of accounting at Wake Forest University, goes a step further. In a paper on the subject in The ATA Journal of Legal Tax Research, he and his co-authors argue that simply giving away the deductions violates most state constitutions, which have anti-gift provisions.

“Government can’t give away things of value without being compensated,” Mr. Duchac said.

There are fierce dissenters, especially among construction industry trade groups and the consulting firms that advise them. The American Council of Engineering Companies petitioned the Senate Finance Committee last summer arguing that the practice of public officials asking for compensation in exchange for a 179D transfer “raises a number of serious legal and ethical questions.”

A few lawmakers have also warned federal officials that asking for fees in return for allocating the deduction might amount to a “kickback.”

But more and more state agencies, public entities and others are pushing back against that interpretation.

In June, the California State University System changed its policy, requiring officials to negotiate reimbursement in exchange for allocating the energy deduction. In October, a Des Moines Register investigation into the tax break lamented that Iowa governments frequently “gained little or nothing for authorizing the deduction on taxpayer-funded construction.” And in December, North Carolina overturned a rule that had prohibited state officials from similarly asking for compensation.

Article source: https://www.nytimes.com/2018/05/25/business/economy/energy-tax-break.html?partner=rss&emc=rss

Why Trump’s Intense Focus on the Trade Deficit Could Cost the Economy in the Long Run

The administration’s approach might quickly reduce the headline level of the trade deficit, but it largely ignores the frustrations of American sectors that are the most promising sources for creating future good export-related jobs.

American companies that make automobiles, semiconductors and other complex products bemoan Chinese government requirements that force American firms to form joint ventures with Chinese companies, sharing their technology. They accuse those partners of widespread theft of intellectual property as they try to catch up in advanced technologies. Many American firms face Chinese competition that receives heavy state subsidies.

These are some of the most stubborn, longstanding issues in American-Chinese economic relations. But they aren’t likely to be fixed overnight, and even if the United States wins concessions, it won’t necessarily affect the trade deficit — especially in the next couple of years.

This helps explain why some prominent advocates of a tougher stance toward China — who applauded President Trump’s tariff threats — are critical of the turn the negotiations have taken.

The tariffs the president threatened “are designed to address China’s technology theft and their plans to dominate advanced and high technology manufacturing,” said Dan DiMicco, chairman of the Coalition for a Prosperous America, which advocates for a hard-line stance, in a statement. By contrast, “an agreement to sell agricultural and energy commodities is the result of bad negotiating and bad economic strategy.”

Exports of agriculture were directly or indirectly responsible for 524,000 jobs in 2014, according to analysis by the International Trade Administration; petroleum and coal products were responsible for an additional 255,000. But combined that is less than 7 percent of the jobs tied to exports that year.

Sectors like computers and electronic products and machinery were responsible for substantially more export-related jobs.

Article source: https://www.nytimes.com/2018/05/22/upshot/why-trumps-obsession-with-the-trade-deficit-could-cost-the-economy-in-the-long-run.html?partner=rss&emc=rss

Trump’s Charm and Threats May Not Be Working on China. Here’s Why.

China’s problems in the area of technology could get worse. American officials are investigating whether a much bigger Chinese tech company, Huawei Technologies, also flouted American trade controls. Huawei has said it adheres to international conventions and local laws.

Despite that vulnerability, China has plenty of negotiating strengths.

White House trade officials have more expertise with trade law, but China has a small but cohesive team of negotiators who report directly to Liu He, a vice premier and nearly lifelong friend of Xi Jinping, the country’s top leader. The group has also streamlined Beijing’s ability to make economic policy decisions, a benefit in evaluating the impact of any concessions to the United States. Policy decisions that once took a month can now take as little as a day, said a person with a detailed knowledge of the process who insisted on anonymity because of the political sensitivity of the issue.

By contrast, the United States has shifted its demands and struggled to send out a consistent message.

The internal divisions were on display again on Sunday. Mr. Mnuchin said in the morning that any tariffs were on hold. Later that day, Robert E. Lighthizer, the United States trade representative, issued a statement in which he said, “As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations.”

In March and early April, Mr. Trump and his trade advisers threatened to impose tariffs unless Beijing agreed to curb long-term subsidies for high-tech industries.

The president then shifted to conciliation.

His financial policy advisers, led by Mr. Mnuchin, sought a fixed reduction of up to $200 billion in the $375 billion American trade deficit with Beijing. China’s trade negotiators resisted again, and the administration ended the weekend with a joint statement by officials from the two countries that did not commit China to any specific concessions.

Chinese and American officials did exchange lists last week of extra goods that China might buy to narrow the deficit. But China only committed to continue buying ever-rising quantities of American food and fossil fuels, a position reflected in the joint communiqué issued at the close of the talks.

Article source: https://www.nytimes.com/2018/05/21/business/china-trade-trump.html?partner=rss&emc=rss

On Trade, the U.S. and China Consider the Unthinkable: Breaking Up

American trade policy “will respond to hostile economic competitors, will recognize the importance of technology, and will seek opportunities to work with other countries that share our goals,” Robert E. Lighthizer, the United States trade representative, recently told the Senate Finance Committee.

The focus on disengagement reflect broader political realities. China is rapidly building a world-class navy; conducting military exercises in Africa and off the shores of northern Europe; and developing some of the world’s most advanced stealth fighter planes and ballistic missiles. The military muscle-flexing has caused alarm in Washington and directly influenced trade policy.

In China, leaders were alarmed five years ago by the former National Security Agency contractor Edward Snowden’s disclosures that American intelligence services had involved technology companies in the United States in its spying on China and its allies. China also faces rising labor costs — meaning cheap manufacturing will no longer provide as many jobs — and has a rising class of educated young people for whom it needs to find well-paying, high-tech jobs. While many American and European companies see Made in China 2025 as building up government-supported rivals, Chinese leaders see the plan as essential to the country’s future prosperity.

ZTE’s punishment, in particular, exposed big gaps in China’s economic prowess.

“It seems likely that the current trade dispute, and the ZTE sanctions in particular, will spur the Chinese government to double down on its economic autarky model, where they seek self-sufficiency in a wider array of technology-based products,” said Robert D. Atkinson, the president of the Information Technology and Innovation Foundation, a Washington policy research group backed partly by Western technology companies.

The Chinese and American plans both face long odds.

At first glance, China’s might seem to have a better chance of success. The country’s state-controlled banking system can steer huge loans at very low interest rates to any industry the central government chooses. Local governments have also been urged to promote targeted industries, which they can do through subsidies like providing downtown land at virtually no cost. Semiconductor factories are now rising in major cities all over China, posing a formidable challenge to the industry’s global players.

But China has a long way to go. It trails the United States significantly in crucial areas like microchips, software design and high-end precision manufacturing. As one example, semiconductors designed in the United States make up half the chips China buys every year. American companies can already design and will soon be manufacturing semiconductors with circuits just one-fifth of the size of Chinese circuits.

Article source: https://www.nytimes.com/2018/05/16/business/china-us-trade-disengage.html?partner=rss&emc=rss

What Will Italy’s Next Government Do? A Leak Jolts Stocks

They had argued that their proposal to hold a referendum on whether to leave the eurozone was a thing of the past, even as the party’s founder, the comedian Beppe Grillo, floated the idea again this month.

But the leaked document, the authenticity of which has not been disputed, revealed that their anti-establishment and euroskeptic heart still pulsed.

The parties had already talked about other proposals in the draft, though their inclusion in the document seemed to solidify them. The text confirms that both parties want an “immediate withdrawal” of European Union sanctions against Russia, to which both parties have grown close.

“We confirm our membership of the North Atlantic alliance, with the U.S. as a privileged ally and an opening to Russia, which should not be viewed as a threat but an economic and commercial partner,” the document reads.

As part of the immediate fallout, the spread between Italy’s and Germany’s 10-year bond yields grew.

Mr. Salvini, speaking on Facebook live, relished the angst.

“You remember the spread?” Mr. Salvini said mockingly, calling it the obsession of the “great financial powers” toying with Italy’s future. He recalled that it was bankers with concerns about “the increasing spread, the sinking markets” who forced the collapse of Silvio Berlusconi’s government in 2011.

Then he took aim at the elites in Washington, Berlin and Brussels, saying that he would ignore their concerns about the potential new Italian government and put Italians first.

Article source: https://www.nytimes.com/2018/05/16/world/europe/italy-talks-leak-markets.html?partner=rss&emc=rss

Tech We’re Using: What Improved Tech Means for Electric, Self-Driving and Flying Cars

The people developing autonomous vehicles should probably be thinking as much about how to get people to accept the technology, and how to protect individual freedom, as they are about making the technology work.

What about flying cars?

Inventors have not given up that dream. Just a few months ago, an outfit in Slovakia called AeroMobil unveiled a design for a battery-powered flying car that the company says will be able to land and take off vertically as well as drive on roads. It would fly autonomously, meaning the driver theoretically wouldn’t need a pilot’s license. AeroMobil says the vehicle will be available in five to seven years. AeroMobil has also developed a flying car with an internal combustion engine that requires only a very short runway. It will be available in 2020, AeroMobil says. We’ll see!

Flying cars would be very expensive and therefore never more than a niche product. Until we invent some kind of “Jetsons”-like antigravity technology, flying cars will always be inherently inefficient. When you’re in the air you’re carrying around equipment you don’t need for flying, like large road-worthy wheels, and when you’re on the ground you’re carting around stuff that is useless on the highway, like wings or rotors.

For my money a more plausible concept is one being developed by Airbus, the giant European aircraft manufacturer, called Pop Up. It’s a passenger pod that can be carried around by a battery-powered unit that looks like a large hobby drone. The drone carries the pod across town, then drops it onto a battery-powered chassis for driving around the city. It would be a shared, on-demand service and therefore more within the reach of regular folks.

What are your favorite tech tools for doing your job?

An app called AudioNote has been life changing. It records sound while you type notes on your MacBook or iPad. Later, you can click on a word in the text and it will take you to that spot in the recording, so you can easily double-check quotes. In the old days, looking for a quote in a long recorded interview was incredibly time consuming.

LinkedIn is very useful for finding and contacting sources, and for bypassing all the people corporations employ to keep you from finding out what’s really going on. But I also still use snail mail. Everyone is so bombarded with electronic communications these days that often a letter is the best way to get somebody’s attention.

Beyond your job, what tech product are you currently obsessed with using in your daily life?

I’m fascinated by products that seem low tech but are actually very advanced. An example would be the Nomos watch I bought my wife for our 25th anniversary last year. The watch is purely mechanical — you have to wind it up. But, as I learned during a visit to the Nomos factory in a village in eastern Germany, it would not be possible to make the watches as exquisitely thin and light as they are without state-of-the-art computer-driven machinery.

Article source: https://www.nytimes.com/2018/05/16/technology/personaltech/electric-self-driving-flying-cars.html?partner=rss&emc=rss

Economic Scene: G.O.P. Insists Making Poor People Work Lifts Them Up. Where’s the Proof?

Republicans were motivated, of course, by doctrine. “Much of the Republican welfare reform policy was based on values,” wrote Ron Haskins, one of the top architects of the Republican welfare strategy that Mr. Clinton signed into law, in his insider tell-all “Work Over Welfare: The Inside Story of the 1996 Welfare Reform Law.”

Research into the potential effects of ending welfare as America then knew it seems to have played only a bit role.

What motivates Republicans today? Raw dogma? They cannot be hoping to pay for their tax cuts by cutting nutrition benefits. Other than Medicare and Social Security, there is no program in the meager social safety net with enough money to pay for those.

I have suggested that Mr. Trump’s approach to welfare might be calibrated to appeal to the white blue-collar voters in his base who feel that anti-poverty programs amount to using their taxes to help undeserving black and Hispanic recipients.

Let’s assume, for the sake of argument, that the president and congressional Republicans honestly want to tweak welfare to improve the lot of poor Americans; to build a safety net that revolves around work but also provides help when work can’t be had.

There is, in fact, a lot of research on what works and what doesn’t. Much of it was carried out by MDRC, which starting in the late 1980s conducted more than a dozen experiments in cities around the country to explore the consequences of different paths from welfare to work.

Here are some thoughts: Rather than threatening workers to get them to join the work force, offer carrots instead. The earned-income tax credit, for instance, which increases the incomes of workers on low wages, has done a great job not only in drawing single mothers into the work force but in improving their incomes as well, delivering additional benefits for their children.

MDRC also identified a series of programs to “make work pay.” Spending real money on training has been found to help workers escape dead-end jobs at low wages. I am not optimistic that these ideas will find their way into the policy mix, however. They just don’t fit in the Republican system of belief.

Article source: https://www.nytimes.com/2018/05/15/business/economy/work-safety-net.html?partner=rss&emc=rss

Federal Tax Cuts Leave States in a Bind

Some state tax systems are linked more closely to the federal tax code than others. The difference lies in how states define income for the purposes of their tax calculations. Most states, including Maine and California, start with adjusted gross income, Line 37 on a standard 1040 form. Any federal provisions that get applied farther down the 1040 form — like itemized deductions — do not affect those states’ tax collections.

But a handful of states, including Minnesota, base their tax codes on federal taxable income, Line 43 on the 1040 form. And what goes on between those two lines is where most of the changes passed by Congress will be felt, resulting in a higher taxable income for many families. (A few states apply a hybrid of the two methods.)

Even in states that are less affected, failing to adapt their tax codes to the federal law could make it hard for residents to figure out what they owe — and, in some cases, force them to pay more. The longer states wait, the less time residents, businesses and state tax officials have to adapt to the new rules before next year’s filing season.

“Inaction becomes action this time,” said Richard C. Auxier, a research associate at the Tax Policy Center. “People’s taxes will change, states’ revenues will change.”

Several factors are complicating the issue for states. Congress passed its tax overhaul late in the year and with minimal debate, giving states relatively little time to assess the effects and plan a response. Even now, the full impact on state budgets is not clear, meaning legislatures are deciding how to take advantage of a revenue stream that could fall short of estimates. In addition, most of the changes to the individual tax code expire after several years, further muddling states’ plans.

Moreover, the tax debate is hitting as state budgets are strained by rising health care and pension costs, among other factors. Those strains could worsen in coming years if the federal government cuts back funding — perhaps because of deficits caused, in part, by the tax law itself.

And states, unlike the federal government, generally cannot plug budget holes by running deficits. That makes the unexpected revenue from the tax law a fiscal temptation.

Article source: https://www.nytimes.com/2018/05/12/business/economy/state-tax.html?partner=rss&emc=rss

Bond Market Indicates Doubt About Trump’s Economic Targets

“We’re not there yet, but we’re getting progressively closer,” said Steven Abrahams, head of investment strategy at the broker dealer Amherst Pierpont. “And I think we will get closer, faster than the market currently anticipates.”

In a speech last month, the San Francisco Federal Reserve president, John Williams, described an inverted yield curve as “a powerful signal of recessions.”

In part, that’s because the yield curve is more than just an economic indicator. It actually helps determine decisions that are crucial to the health of the American economy. That’s because a flattening yield curve makes banking — basically the business of borrowing money at low short-term rates, and lending it at higher long-term rates — less profitable. If the yield curve inverts, it effectively slams the doors on lending. And because debt is the fuel that drives the economy’s engine, a recession often follows.

Mr. Williams stressed that he does not see an inverted yield curve, or recession, coming any time soon. And most economists agree. Over the next few years, private forecasters see United States economic growth peaking at 2.8 percent in 2018 before slowing to 2.5 percent in 2019 and 1.9 percent in 2020, according to Bloomberg data. That’s a bit faster than the 2.2 percent growth rate of the United States economy since 2012.

But it’s basically the same as the 2.6 percent average growth rate since 1980, suggesting that the $1.5 trillion tax overhaul signed into law by Mr. Trump in December is expected to have a negligible effect on long-term economic growth. Doing better would depend on increasing the supply of workers and raising productivity, a poorly understood process generally thought to depend on making large-scale investments in things like education, infrastructure and expensive equipment for companies.

Not everyone agrees that the bond market is sending a warning sign. For much of the last decade, the Federal Reserve and other central banks have been buying government bonds with the aim of pushing interest rates lower to support economic growth.

So the relatively low long-term rates partly reflect the large bond holdings of central banks, said Matthew Luzzetti, a senior economist at Deutsche Bank. That means those low rates contain “much less of a signal about negative growth in the future,” Mr. Luzzetti said.

Article source: https://www.nytimes.com/2018/05/11/business/bond-rates-recession.html?partner=rss&emc=rss