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Economix Blog: Putting Off the Employer Mandate

July 2, 2013 by Leave a Comment

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.

Well, I didn’t see that coming.  The Obama administration announced Tuesday afternoon that it was going to delay an important part of the Affordable Care Act for one year.  The rule requiring employers with at least 50 full-time workers to provide them with coverage or pay a penalty (also known as the employer mandate) will now be enforced starting in 2015, not 2014 as originally planned.

Here’s a very brief look at why, what, and what it means.

Today’s Economist

Perspectives from expert contributors.

A Treasury official published a blog post explaining that officials decided to give businesses more time to comply with the reporting requirements.  As The Times reported:

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark J. Mazur, an assistant Treasury secretary, wrote on the department’s Web site in disclosing the delay. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”

Though the mandate will ultimately affect only a few employers, it is actually an important piece of the law’s architecture.  Without it, employers who currently provide coverage to their workers could drop the coverage and send their workers over to the state health care exchanges.  And since some of those employees would be eligible for subsidies to help defray the cost, the employer would be shifting what is now a private cost over to the government.

The penalty for such actions was supposed to kick in next year; now they’ll kick in the year after next.  The government needs a bunch of information from businesses to determine if the penalty is warranted, and the White House is now saying that putting that reporting process in place is going to take longer than expected.

How will this affect coverage?  Hard to see it having much impact at all.  The important coverage aspects of the Affordable Care Act — the Medicaid expansion and the state health care exchanges — are still scheduled to be up and running by Oct. 1, the beginning of the fiscal year (of course, not every state has accepted the Medicaid part). And the requirement to have health insurance or pay a penalty – the individual mandate – will still take effect in 2014.

And a vast majority of employers with at least 50 full-time workers — about 95 percent — already offer coverage to the workers.  With the exchanges going up, there’s a chance some employers could try to pull off the cost shift noted above, but the mandate will be in place by 2015, so we’re unlikely to see much of that.

At least one report suggests a budgetary cost from the delay, since the revenues from penalties would flow to the Treasury Department.  But a colleague who tracks this stuff very closely tells me that while the Congressional Budget Office earlier this year scored this part of the bill as providing $5 billion to the Treasury next year, its most recent score dropped that to zero.  The budget office appears to have wisely assumed it was already going to take a while to get this part of the system up.

So, no budget cost, little impact on coverage.  Is this delay just not a big deal?

Um … this is Washington, folks, and we’re talking Obamacare.  There will be much hay made of this delay in coming days.  Conservatives will argue that this confirms that the law is unmanageable — which is a bit rich, since many of them have been trying to kill it, block it, and stop it in its tracks. (Speaker John Boehner’s press secretary, Brendan Buck, on Twitter: “Obamacare. Such a train wreck.”)  Liberals may argue that the administration is caving to business, which just wants to put off the paperwork for a year.

I think it’s an unfortunate delay of an important but relatively small piece of the bill, more growing pains of the type I’m sure Medicare had when it got going than anything existential. But that’s not how it will play in the hurly-burly of the next few days of Washington politics.

Article source: http://economix.blogs.nytimes.com/2013/07/02/putting-off-the-employer-mandate/?partner=rss&emc=rss

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Michael Hastings, 33, Winner of Polk Award

June 19, 2013 by Leave a Comment

His death, in a car crash in Los Angeles at about 4:30 a.m., was confirmed by his wife, Elise Jordan. Mr. Hastings was believed to have been alone in the car, which struck a tree at high speed, according to the Los Angeles County Coroner’s office. He lived in New York City.

In 2010, Mr. Hastings won a George Polk Award, presented by Long Island University for reporting in the public interest.

The award honored his Rolling Stone magazine cover story, “The Runaway General,” published that June. In it, Mr. Hastings profiled Gen. Stanley A. McChrystal, then the top commander of United States forces in Afghanistan.

The article quoted the general and members of his staff making disparaging comments about members of the Obama administration, including Vice President Joseph R. Biden, with respect to their handling of the Afghan campaign. Within days of its publication, President Obama met with General McChrystal in the Oval Office before firing him, ending his 34-year military career.

An inquiry into the article by the Defense Department inspector general the next year found “insufficient” evidence of wrongdoing by the general, his military aides and civilian advisers.

The inspector general’s report also questioned the accuracy of some aspects of the article, which was repeatedly defended by Mr. Hastings and Rolling Stone.

Mr. Hastings was a contributing editor at Rolling Stone at his death and had also written for GQ and Newsweek magazines.

Michael Mahon Hastings was born on Jan. 28, 1980, in Malone, N.Y. After attending Connecticut College, he earned a bachelor’s degree in journalism from New York University.

As a young correspondent for Newsweek, Mr. Hastings covered the Iraq war. His fiancée, Andrea Parhamovich, followed him there, taking a job with a nongovernmental organization. She was killed in 2007 when her car was ambushed by Sunni insurgents.

Mr. Hastings’s memoir of the experience, “I Lost My Love in Baghdad: A Modern War Story,” was published in 2008.

Besides his wife, Mr. Hastings is survived by his parents, Brent and Molly Hastings; two brothers, Jeff and Jon; and his grandmother, Ruth Mahon.

His other books are “The Operators: The Wild and Terrifying Inside Story of America’s War in Afghanistan” published last year, and “Panic 2012: The Sublime and Terrifying Inside Story of Obama’s Final Campaign,” published in January.

Daniel E. Slotnik contributed reporting.

This article has been revised to reflect the following correction:

Correction: June 19, 2013

An earlier version of this obituary, using information from the family, misstated the name of Mr. Hastings’s surviving grandmother. She is Ruth Mahon, not Ruth Mahon Hastings.

Article source: http://www.nytimes.com/2013/06/20/business/media/michael-hastings-award-winning-journalist-dies-at-33.html?partner=rss&emc=rss

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Economic Scene: The Payoff in Retiring a Few Years Later

March 5, 2013 by Leave a Comment

“It’s a disaster, but a slow rolling one,” said Jared Bernstein, former chief economic adviser to Vice President Joseph R. Biden Jr.

N. Gregory Mankiw, the former chief economic adviser to President George W. Bush, wouldn’t disagree. “Other than being precisely the opposite of the kind of fiscal changes we need, what’s not to like?” he told me, with more than a touch of irony.

Yet despite the broad criticism, what the impasse between Democrats and Republicans just did to the federal budget is not at all atypical. It follows to the letter the most ironclad rule of American politics, which has held sway for the last three decades: spare the old.

The impasse was portrayed as a doomsday machine that went off unexpectedly — the consequence of an intractable divide in Washington over taxes and spending. It led to the so-called sequester, the product of a longstanding bipartisan reluctance to tinker with the social safety net erected to maintain the living standards of the elderly. Why? Because the old vote at much higher rates than the young.

It’s true that Republicans have offered plans to limit spending on Medicare and Social Security by turning them into voucher-type programs, letting seniors buy their own health insurance with a set amount of money and manage their own pensions. But they never dared pay the political cost of turning these ideas into law even when they controlled Congress and the White House.

Democrats, meanwhile, have been reluctant to put up an all-out fight for the large tax increases needed to pay for the expanding entitlement programs demanded by an aging population, without any cuts. Usually champions of progressivity, they have nonetheless resisted proposals to direct benefits for the elderly more specifically to low and middle income Americans.

This fixation on defending entrenched positions is getting us nowhere. The problem — a growing cohort of retirees, born during the baby boom, now claiming Social Security and Medicare — is only getting bigger.

But what if there were a way for the government to ease the strain that the aging place on the budget while actually increasing their income in retirement, at little or no cost to their benefits? A well-designed reform would even improve the nation’s rate of economic growth. The way to do it is simply to encourage older workers to spend a larger share of their increasing life spans in the work force.

Reform along this line might even garner bipartisan support. But it requires Democrats and Republicans to overcome their fear of disturbing the old.

Spending on Medicare, Social Security’s old age pensions and retirement programs for civilians and military on the federal payroll will hit almost 9 percent of the nation’s total economic output by 2023, according to baseline projections by the Congressional Budget Office. It will consume about 38 percent of the federal government’s entire budget, up from 25 percent four decades ago, according to the Office of Management and Budget.

Meanwhile, the C.B.O. expects the discretionary part of the budget — which includes every program requiring annual appropriations, from the budgets of the Pentagon and the National Academy of Sciences to worker training programs and early childhood education — will shrink to its smallest share of the economy since the Eisenhower administration. Forty years ago discretionary programs, including much of the spending aimed at improving the economy for future generations, consumed more than half of the budget. In 10 years they will consume less than a quarter.

Senior citizens, to be sure, merit protection. Social insurance to keep retirees from dropping out of work and into poverty is as necessary today as when President Franklin Roosevelt signed the Social Security Act in 1935. But an income support system meant for a society where people retired in their late 60s and died in their late 70s is under strain as Americans take to retiring earlier and living well into their 80s and beyond.

Article source: http://www.nytimes.com/2013/03/06/business/the-payoff-in-retiring-a-few-years-later.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

States Want to Have Say During Talks Over Budget

November 25, 2012 by Leave a Comment

They have been down this road before — Congress has already missed several self-imposed deadlines to cut the deficit — but many say they fear that this time, the talks in Washington to avert the so-called fiscal cliff will actually lead to deep cuts.

So they want a say in the negotiations.

“The main message is that it’s important to remember that, on a lot of areas of governance, we’re partners — and that these issues can’t be solved simply by cost-shifting to the states, because the states aren’t really in a position to do all that,” said Gov. Jack Markell of Delaware, chairman of the National Governors Association. “We just want to make sure that we have a voice as these decisions are being made.”

But there is a long history of the federal government’s giving short shrift to the needs of states and cities — by making cuts in federal aid that forced service cuts or tax increases at the local level, or by passing laws requiring localities to take expensive actions without giving them the money to do so.

So in recent days, more than a dozen mayors with the United States Conference of Mayors have gone to Washington to lobby lawmakers. And last Monday, Mr. Markell, a Democrat, joined several governors from both parties to discuss the issue on a conference call with Vice President Joseph R. Biden Jr.

The states, whose tax collections are still below the peak levels they reached in 2008, are in something of an unusual situation. That is because the automatic tax increases and spending cuts that are scheduled to begin in January, called “the fiscal cliff” by Ben S. Bernanke, the Federal Reserve chairman, are actually better for them in some respects than many of the alternate proposals in Washington.

Half of the cuts scheduled to take effect at the beginning of next year would be to military spending, which would affect states only indirectly. The scheduled cuts to domestic programs would leave Medicaid, the single biggest source of federal aid to states, untouched. And the planned federal tax increases would increase revenues in states whose tax codes are closely linked to the federal code.

But governors said that no one was rooting for President Obama and Republicans in Congress to fail to reach a financial accord, in part because they fear that the resulting combination of spending cuts and tax increases could prompt another recession, which their states can ill afford.

Gov. Rick Snyder of Michigan, a Republican, noted that the spending cuts and tax increases were intended to be so undesirable that they would spur opposing sides in Washington to overcome their antagonism and strike a deal on taxes and spending just to avoid them.

The plan “was designed to be a terrible answer,” Mr. Snyder said, “and I think they did a fairly effective job of doing that.”

Pat McCrory, the Republican governor-elect of North Carolina and former mayor of Charlotte, said state and local officials needed a greater voice in Washington.

“I don’t think the debate should be just between the White House and Capitol Hill, but the state and local government should be at the table,” Mr. McCrory said. “Because I assume some of their answers are going to be pass-throughs to the states or to cities, as I saw as mayor in the past.”

The automatic cuts would hurt states in several areas. A recent analysis by the Pew Center on the States found that roughly 18 percent of the federal grant dollars flowing to the states would be subject to across-the-board cuts, including money for education, public housing and nutrition programs for low-income women and children.

But some governors fear that any “grand bargain” struck by Mr. Obama and Congress could lead to even deeper cuts to states, and they worry that it could include tax provisions that they believe would be harmful, like ending the tax-exempt status of municipal bonds that makes the bonds more attractive to investors.

But the needs of states and cities have often been an afterthought when Washington has talked about curbing spending.

Alice M. Rivlin, a former director of the Office of Management and Budget who served on two recent high-profile federal commissions — the National Commission on Fiscal Responsibility and Reform, better known as the Simpson-Bowles Commission, and the Bipartisan Policy Center’s Debt Reduction Task Force — acknowledged as much in an appearance this summer.

“I’ve served on not one but two commissions on the federal deficit,” Ms. Rivlin said when another group she belongs to, the State Budget Crisis Task Force, released a report warning of the fiscal problems facing states. “And I can attest that although we were certainly aware that the proposals we made would impact state and local government, we did not do a serious analysis of what would happen.”

Gov. John R. Kasich of Ohio, a Republican, has been on both sides of the federal-state divide: trying to cut the federal budget as a chairman of the House Budget Committee, and now seeking to preserve services, especially for the poor, as a governor.

“I’m just saying that if you’re going to affect us, you’d better realize there’s a bottom line that affects flesh and blood and real people,” he said this month at a meeting of the Republican Governors Association. “And you can easily throw every one of these budgets into the red by just trying to get a nice number.”

The absence of a formal dialogue between the federal government and the states was cited as a danger by the State Budget Crisis Task Force, a private group led by Richard Ravitch, a former lieutenant governor of New York, and Paul A. Volcker, a former chairman of the Federal Reserve.

“There are no standing structures and procedures within the federal government for analyzing the impacts on states and localities of reduced federal spending or federal tax changes, and there is little dialogue about these issues between the federal government and state and local governments,” its report said last summer. It recommended creating something like the Advisory Commission on Intergovernmental Relations, which lasted from 1959 to 1996.

John Kincaid, a former executive director of the advisory commission, which included federal and state officials, said it grew less effective as political polarization increased.

“No matter what happens in Washington, it’s going to hit state and local governments very hard,” said Mr. Kincaid, who is now a professor of government and public service at Lafayette College in Easton, Pa. “I think, by and large, states have become accustomed to this pattern of decision-making, so they’re going to brace themselves for whatever comes. State and local officials will lobby very hard to get what they can out of this bargain, but they won’t be all that significant as players.”

Article source: http://www.nytimes.com/2012/11/25/us/politics/states-want-to-have-say-during-talks-over-budget.html?partner=rss&emc=rss

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House Again Seeks Votes, After Failing to Pass Debt Plan

July 29, 2011 by Leave a Comment

“Any solution to avoid default must be bipartisan,” Mr. Obama said. “I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support from both parties in the House, a plan that I can sign by Tuesday.”

Mr. Obama urged Republicans in the House and Senate to abandon a bill that “does not solve the problem” and has no chance of passage in the Senate.”

“There are a lot of crises in the world that we can’t always predict or avoid, he said. “This isn’t one of those crises.”

But there was no clear signal what the next step would be. Among the several possibilities were changes to the House bill, an attempt by Senate Democrats to leapfrog forward with their own plan, or a new attempt to reach a compromise on the part of all the major players.

In an effort to break the logjam, Senator Harry Reid, the majority leader, called on Senator Mitch McConnell, the Republican leader, to meet with him on Friday to try to resolve to the stalemate, given the failure of House Republicans to advance their own budget proposal.

“My door is open,” Mr. Reid said as the Senate convened. “I will listen to any idea to get this done in a way that prevents a default and a dangerous downgrade to America’s credit rating. Time is short, and too much is at stake, to waste even one more minute.

“The last train is leaving the station,” he said. “This is our last chance to avert default.”

Mr. McConnell, who had earlier been working with Mr. Reid on a fallback plan, abandoned that attempt and has been supporting the effort by the House speaker, John A. Boehner, to push through a proposal that would raise the debt limit in two stages — an approach flatly rejected by Senate Democrats and the White House. Mr. McConnell also had been talking with Vice President Joseph R. Biden Jr. but broke the conversation off while the Boehner plan was pending.

Mr. McConnell, too, came to the Senate floor and offered little indication that he was ready to deal, accusing Democrats of devoting recent days to undermining the House plan. “Our Democratic friends in the Senate have offered no solutions to the crisis that can pass either chamber,” he said.

Mr. Reid said he would be moving within hours to force votes on his own plan to cut spending by about $2.5 trillion over 10 years and raise the debt limit through 2012, a move that would lead to a crucial showdown vote over the weekend. He said he would be making changes to his measure to attract more support but made clear that he considered the Senate plan the final effort to avert a default next week.

“There will be no time left to vote on another bill or consider another option here in the Senate,” he said. “None.”

Mr. Reid said he had also had a “sobering” conversation on Friday with Treasury Secretary Timothy F. Geithner about the consequences of a default.

“It is really precarious for our country,” he said. Just minutes from a roll-call vote on the plan pushed by Mr. Boehner, Republicans stunned the House on Thursday by interrupting the debate and turning to routine matters while Mr. Boehner and his lieutenants tried to pressure reluctant conservatives into backing their plan. The House then went into a recess and shortly before 11 p.m., the leadership announced that no vote would be held.

The surprise postponement threw the endgame of the debt limit clash into confusion and raised concerns among some on Capitol Hill that the government was lurching toward a default. The White House and Senate Democratic leaders had been waiting for the House to act before making their next move with an eye on the Tuesday deadline set by the Treasury Department for raising the debt ceiling or facing the possibility that the government would not be able to meet all its financial obligations.

Republicans had expressed confidence throughout Thursday that they would round up enough recalcitrant conservatives to pass their plan, but they obviously miscalculated.

Article source: http://feeds.nytimes.com/click.phdo?i=20e8305972f909d42af010d494295722

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