Monthly Archives: September 2012

Two troubling stories hit print this week.  They are troubling because they bode ill for the prospect of meaningful Medicare reform, and therefore for a budget deal.

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The later of the two appeared in this morning’s Washington Post.  It uses poll results to show that voters in key swing states — Florida, Ohio, and Virginia — strongly oppose the premium-support Medicare model of Governor Mitt Romney and Representative Paul Ryan.  At least 70 percent of seniors responded to the poll that they want to retain Medicare as a system of guaranteed benefits, rather than receiving fixed-dollar premiums to choose among alternative plans.  In Florida, 65 percent of the entire population favor the current system.

On the question of whom they trust to deal with the Medicare program, respondents favored President Obama by 19 percentage points in Ohio, 15 percentage points in Florida, and 13 percentage points in Virginia.  In a different poll, strikingly, respondents in these states who consider Medicare to be an important issue favor President Obama by 59 percent to 36 percent; those who do not consider Medicare to be an important issue favor Governor Romney by 54 percent to 36 percent.

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It looks like 47 might become the biggest number in U.S. politics since “54º 40′ or fight,” which is coincidental enough given that 47 is the average of 54 and 40.  But beyond coincidence, what’s with 47?

It seems clear that the now famous (or infamous to some) number came from an estimate of the percentage of the population that pays zero or negative federal income taxes.  The precise estimate was 46.4 percent of all “tax units” (individuals or families that file income tax returns) as of 2011.  The estimate came from Roberton Williams of the non-partisan Tax Policy Center (TPC, an organization created jointly by the Brookings Institution and the Urban Institute).

When that measurement concept is raised, one usually hears that 47 (or 46.4) is too high a percentage of the population to pay no income tax.  One concern is that bearing at least some of the burden of government is a part of citizenship.  Another is that persons who pay no taxes can vote for candidates who will give them benefits without bearing any of the cost. However, this coin has two sides.

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In something of a “scoop,” Meghan McCarthy of National Journal reported this week that two of the most significant outside advisers to President Obama have expressed general approval of “premium support” for health care.  That is positive news substantively, though it underlines the complexity of the political environment in Washington during the election campaign.

Image found here

The story  relates that David Cutler of Harvard and Jonathan Gruber of MIT were consulted by the Simpson-Bowles commission during its deliberations two years ago.  Members of the commission’s staff asked the two advisers’ opinions of the concept of giving Medicare beneficiaries cash to choose among alternative health-insurance plans, including private plans.  In the usual clipped and short-hand language of e-mail communication, the two both mentioned some preconditions that would need to be met, including favorable and useful experience under the insurance exchanges in the Patient Protection and Affordable Care Act (PPACA) of 2010, and special work to protect the elderly from “cherry-picking” and confusing marketing by insurance companies.  But with those conditions met, Cutler and Gruber expressed generally positive views of this approach, known as “premium support” among the cognoscenti of health care. Read More

The U.S. economy, along with most developed nations across the globe, is struggling with unprecedented levels of debt. Are these debt levels manageable? Are tax increases and spending cuts inevitable? Can we grow our way out of the debt crisis? Will we find the political will to solve this problem or must we, much like an addict, hit rock bottom before we truly begin recovery? The Debt Crisis panel will tackle these issues in a frank discussion about the challenges we face in finding and implementing realistic solutions to this compelling issue.

Presented by the Wake Forest University BB&T Center for the Study of Capitalism.

Presentation Panel:
Michael Peterson, President and Chief Operating Officer, Peter G. Peterson Foundation; President and Founding Partner of GPX Enterprises, LP
Joe Minarik, PhD, Senior Vice President and Director of Research at the Committee for Economic Development
Phil Smith, National Political Director and SE Regional Director of The Concord Coalition
Sherry Jarrell, PhD (moderator), Professor of Practice of Finance & Economics, WFU Schools of Business


Click here to view an a recording of the event.

After the election campaign, the nation likely will turn in one way, shape or form to dealing with the budget.  Several analysts and bipartisan groups have had their say on what the ultimate plan should be.  Among those statements is a paper by Andrew G. Biggs, Kevin A. Hassett and Matthew Jensen of the American Enterprise Institute, entitled “A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked.”  This paper, released in December 2010, has received an enviable amount of attention for a fairly technical enterprise.

To tell you what I am going to tell you:  The authors argue that the United States should reduce its deficit much more (they pick 85 percent) by reducing spending, and thus much less by raising revenues, than the most widely recognized bipartisan plans (which are at about 50-50).  I think they overplay their statistical hand.  This post gets a bit nerdy, but in my view the reasoning comes down to a fairly fundamental issue.  So all but the faint of heart, please read on.

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