Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
April 16, 2014

April 15, 2014

Who Gains Most From Tax Breaks?

Derek Thompson: “The Times drew a magnificent graph of who benefits from the $1 trillion in tax breaks hidden within our law. The upshot is that, just as the rich pay the most taxes, they benefit the most from tax breaks. Refundable credits, which offer lower income families the opportunity to earn money from the federal income tax law, include child credits, college credits, and the earned income tax credit. The majority of capital gains benefits accrue not to the 1%, but to the 0.1%. That’s one reason why our largely progressive tax code actually becomes slightly regressive at the very top, as more and more money comes from via tax-preferred investments.”

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A Nation Divided?

Pew Research’s latest report on The Next America gives an excellent “data-rich portrait” of the demographic and cultural changes taking place within America.

Looking ahead, “the cost of our programs for seniors will soon exceed half of the federal budget. This spending continues to crowd out budgeting for education, research and infrastructure – investments that would help build a better future for Millennials and their children.”

Still, Pew Research finds very little evidence “that old and young are spoiling for a fight over these issues. To the contrary, they like each other too much.”

“If Americans can bring to the public square the same genius for generational interdependence they bring to their family lives, the politics of these issues will become less toxic and the policy choices less forbidding.”

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Obamacare: Basking in the Moment of Victory

Eugene Robinson declares “it’s all over but the shouting: Obamacare is working.”

“All the naysaying in the world can’t drown out mounting evidence that the Affordable Care Act, President Obama’s signature domestic achievement, is a real success.”

“Why was the Affordable Care Act so desperately needed? Because without it, 54 million Americans would currently have no health insurance. Within three years, according to the CBO, Obamacare will have slashed the problem nearly in half.”

Robinson asserts that even with Republican opposition, “the reforms are here to stay.”

“More likely, Republicans will continue to mumble vaguely about ‘private-sector incentives’ and ‘consumer choice’ — without acknowledging that the ACA reforms offer plenty of both. And the GOP will continue to bray about ‘big government health care,’ which is an out-and-out lie.”

“The Affordable Care Act is a cautiously designed set of reforms whose impact on most people is approximately zero.”

Robinson concludes that Obamacare is “landmark legislation … because it shifts the incentive structure in the health-care industry in ways that promise to hold down rising costs. [Also], it establishes the principle that health care should be considered a right, not a privilege.”

Posted at 10:54 a.m.
Health

CBO: Steeper Drop in Deficit Than Previously Estimated

Bloomberg: “The U.S. government’s deficit will fall to $492 billion this year, according to the Congressional Budget Office, a steeper drop than originally predicted from $680 billion in fiscal year 2013.”

“The 2014 deficit will be 2.8 percent of the economy, according to CBO, almost 32 percent below fiscal year 2013, when it was 4.1 percent. The deficit will shrink again in fiscal 2015 to $469 billion, before rising to about $1 trillion in fiscal years 2022 to 2024, CBO said.”

“President Barack Obama has often pointed to the declining deficit in making the case for his economic program, including greater spending on infrastructure and other items. Republicans have called for deeper cuts to balance the budget.”

But: “Deficits will rise sharply after next year, CBO said. Cuts to discretionary spending on programs such as military defense and national parks will be more than offset by a rise in health care and Social Security costs, as the baby boomer generation ages into retirement, as well as higher interest payments on the national debt.”

Posted at 10:41 a.m.
Budget & Taxes, Economy

Is the Middle Class Taxed Unfairly?

Gallup: “Nearly half of Americans, 49%, believe middle-income people … pay too much in taxes, up from 42% a year ago and the highest Gallup has found since 1999. At the same time, the 42% who say middle-income Americans pay their ‘fair share’ in taxes is down 11 percentage points from last year. This is also the first time since 2007 that a higher percentage of the public says middle-income Americans are paying too much rather than their fair share.”

“News reports about higher tax rates for some taxpayers may have influenced Americans’ perceptions of middle-income taxes, or perhaps the ongoing debate between Obama and Republicans about efforts to reduce income equality are having an effect. Also, many Americans consider themselves middle class, even if they fall on the higher end of the income distribution, and this could help explain the spike.”

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How to Pay Taxes at 12.6%

Andrew Ross Sorkin provides a rundown of the tax perks available to corporations that “have famously excelled at this game.”

“How well? Companies paid an average effective federal tax rate of 12.6 percent in 2010, the last time the Government Accountability Office measured the rate.”

Some of the most “egregious corporate tax loopholes” include:

Carried interest benefit. “Despite repeated efforts to repeal it, the loophole has remained, in part because of well-financed industry lobbying in Washington. But much of the lobbying isn’t coming from the private equity industry — it’s coming from another beneficiary that often goes overlooked: the real estate industry.”

Deducting legal expenses. “Amazingly, a company is allowed to claim those costs as a business expense.”

Corporate jets. “Companies that own aircraft can depreciate their planes more quickly than airlines — over five years instead of seven — and claim the deduction.”

Executive stock options. “Inexplicably, many of Silicon Valley’s newest star companies will be able to shelter a large portion of their profits as a result … The effect is enormous and has significantly changed the bottom line — and tax rates — at some of the largest companies.” Amazon’s combined tax rate, for example, was 9.4% for the period 2010 – 2012.

How Will Obamacare Impact Your Taxes This Year?

Sophie Novack and Sam Baker explain how some Obamacare provisions will raise the tax bill for some this year.

“The law’s biggest tax provision—billions of dollars in tax credits to help people cover the cost of their premiums—is already in effect, but doesn’t affect the taxes due on Tuesday. A handful of smaller provisions, mostly affecting wealthy households, will show up for the first time in this year’s filing.”

“Among this year’s changes: a 0.9 percent increase in Medicare taxes and a 3.8 percent surtax on investment income. Both are limited to high-income taxpayers, and both took effect for the first time in the tax season that just ended.”

“Most people won’t notice the extra Medicare tax because it was automatically deducted from their paychecks, but some could face a tax bill they did not expect.”

“This year’s changes are relatively technical and have a narrow reach,’ said Brian Haile, senior vice president for health policy at Jackson Hewitt. ‘Next year is a whole different kettle of fish.’”

April 14, 2014

Obamacare $100 Billion Cheaper Than Expected

“Republicans and their allies keep saying the Affordable Care Act will bankrupt the taxpaying public. Now there’s one more reason to think they are wrong,” Jonathan Cohn reports.

“It comes from the Washington’s official accountant, the Congressional Budget Office, which on Monday released a newly updated projection on how the Affordable Care Act will affect the deficit and insurance coverage. In February, the last time CBO addressed these issues comprehensively, it predicted that the net cost of the law’s coverage provisions would be about $1.4 trillion over ten years. Now, CBO says, it’s likely to be about $1.3 trillion, or $100 billion less.”

acafigure2 Obamacare $100 Billion Cheaper Than Expected

“It’s actually the latest in a series of revisions, each one suggesting the law would cost less money than the previous projection had suggested… And why this latest change? It doesn’t appear to be because the law will reach fewer people. CBO now expects slightly more people to end up with health insurance, at least over the long run. The CBO’s primary explanation for lower costs is that health insurance premiums on the new exchanges—what the administration calls ‘marketplaces’—are lower than CBO had originally expected they would be.”

Posted at 4:03 p.m.
Health

Chart of the Day

Screen Shot 2014 04 14 at 3.01.01 PM Chart of the Day

Brookings Institution: “The juxtaposition of historical data on party unity and ideology in this graphic illustrates how these factors have interacted with House members over time. Today, the Republican Party is markedly more cohesive than the Democratic Party and more ideologically consistent.”

U.N. Climate Report: Time is Running Out

New York Times: “Delivering the latest stark news about climate change on Sunday, a United Nations panel warned that governments are not doing enough to avert profound risks in coming decades. But the experts found a silver lining: Not only is there still time to head off the worst, but the political will to do so seems to be rising around the world.”

“The good news is that ambitious action is becoming more affordable, the committee found. It is increasingly clear that measures like tougher building codes and efficiency standards for cars and trucks can save energy and reduce emissions without harming people’s quality of life … And the costs of renewable energy like wind and solar power are falling so fast that its deployment on a large scale is becoming practical.”

The goal is daunting, according to Reuters: “World emissions will have to be cut by 40 to 70 percent compared with 2010 levels by mid-century, and to near-zero by 2100, to keep warming below 2C, IPCC scenarios show. Such cuts are far deeper than most governments plan.”

And costly: “Economic growth … is projected to grow by 1.6 percent to 3 percent a year this century. Ambitious action to slow climate change would trim annual growth by about 0.06 percentage point.”

Lax EPA Regs Allow Biomass to Pollute More Than Coal

InsideClimate News: “A new study charges that government regulations for biomass plants are riddled with loopholes that allow wood-burning facilities to spew more toxic emissions in the air than coal-fired power plants.”

“The findings are refueling a controversy over whether biomass should be treated as a renewable energy fuel and able to qualify for green incentives, or as a fossil fuel like coal.”

“The study, conducted by the Massachusetts-based Partnership for Policy Integrity (PFPI), found that biomass facilities release as much as 50 percent more carbon dioxide than coal plants per megawatt-hour, and as much as 100 percent more than other air pollutants.”

The loopholes include: “EPA giving biomass plants a ‘free pass’ on limiting CO2 emissions; states not requiring operators to control short-term air emissions spikes at smaller facilities; and states not mandating extra monitoring at plants that burn wood waste, which emit more toxic pollutants.”

Mary Booth, the study’s author says that “biomass should be regulated the same way as coal: ‘We’re talking about the same pollution, the same health effects, but biomass plants get to emit two and a half times as much.’”

Posted at 10:21 a.m.
Energy & Environment

Federal Taxes at Historic Lows

Washington Post: “One of the great ironies of the rise of the tea party movement was that it coincided with the lowest total tax burdens seen in at least 30 years… Overall the trend is downward. The average filer saw her effective tax rate drop from 22 percent in 1979 to 18.1 percent in 2010. Rates on the bottom 20 percent of tax filers went from 7.5 percent to 1.5 percent, while the top 20 percent of earners saw a more modest decrease, from 27.1 to 24.0 percent over the same period.”

taxes Federal Taxes at Historic Lows

Posted at 9:06 a.m.
Budget & Taxes

New York Health Exchanges: A Model for Obamacare Success?

New York Times: “In contrast with the early stumbles in most of the country, New York State, almost from the start, has provided a textbook lesson in how to make the Affordable Care Act work. But it has done so by making some tough decisions.”

“New York has signed up more than 900,000 people for commercial or government plans, lured 16 insurance companies onto its exchange, provided subsidies for most customers and reduced premiums across the board [(by more than 50% from previous years)].”

“But New York also took some aggressive and unpopular steps that few other states have taken, by creating a highly centralized system limiting consumer choice, essentially giving insurance seekers little incentive to shop off the exchange.”

“In an unusual decision that had a strong impact on consumer choices, New York required insurers to offer the same type of coverage on the exchange as off.”

“The result was that none of New York’s insurers offered out-of-network coverage for individuals … So regardless of whether individuals buy their plans on the exchange or off, they cannot get coverage outside a fixed network of doctors and hospitals, even if they are willing to pay more for it.”

“The exchange also benefited from the state’s refusal to reinstate canceled plans when President Obama said it could; state officials said restoring the plans would have caused chaos by upsetting insurance pricing.”

Posted at 8:53 a.m.
Health

Millions Diverted Into Financial Engineering

Paul Krugman looks at the hundreds of millions of dollars spent to build a tunnel through the Allegheny Mountains “for a fiber-optic cable that would shave three milliseconds — three-thousandths of a second — off communication time between the futures markets of Chicago and the stock markets of New York. And the fact that this tunnel was built while the rail tunnel wasn’t tells you a lot about what’s wrong with America today.”

“Who cares about three milliseconds? The answer is, high-frequency traders, who make money by buying or selling stock a tiny fraction of a second faster than other players. Not surprisingly, Michael Lewis starts his best-selling new book Flash Boys, a polemic against high-frequency trading, with the story of the Spread Networks tunnel. But the real moral of the tunnel tale is independent of Mr. Lewis’s polemic.”

“Think about it. You may or may not buy Mr. Lewis’s depiction of the high-frequency types as villains and those trying to thwart them as heroes. (If you ask me, there are no good guys in this story.) But either way, spending hundreds of millions of dollars to save three milliseconds looks like a huge waste. And that’s part of a much broader picture, in which society is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.”

Posted at 8:42 a.m.
Financial Markets

The Great Moderation: So What?

Binyamin Appelbaum: “Perhaps you remember the Great Moderation, the comforting term economists pinned on the period of relatively steady growth that began in the early 1980s.”

Jason Furman “argued in an interesting speech on Thursday that the Great Moderation is still in progress. The growth of jobs and economic activity over the last five years has snapped back into the same kind of steady pattern that prevailed before the recession, a pattern documented in the chart below.”

“Economic volatility, on average, is still lower now than in earlier decades.”

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“This is a hollow victory for those who championed the idea of a Great Moderation. They saw the trend as evidence that the economy was less likely to experience a dramatic downturn. Mr. Furman is essentially arguing that those economists were right in describing the phenomenon, but not its implications.”

Furman: “The Great Recession certainly does reveal serious limitations of the concept of a Great Moderation … After all, there is no sense in which the recession itself — which witnessed the largest peak-to-trough downturn in G.D.P. on record — was indicative of a more stable economy than in the 1950s or 1960s.”

Posted at 8:24 a.m.
Economy

Tax Freedom Day Late This Year

Tax Foundation: “Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for year. A vivid, calendar-based illustration of the cost of government, Tax Freedom Day divides all federal, state, and local taxes by the nation’s income … This year, Tax Freedom Day falls on April 21, or 111 days into the year.”

“Tax Freedom Day is three days later than last year due mainly to the country’s continued slow economic recovery.”

“Higher-income and higher-tax states celebrate Tax Freedom Day later: Connecticut (May 9), New Jersey (May 9), and New York (May 4). Residents of Louisiana will bear the lowest average tax burden in 2014, with Tax Freedom Day arriving for them on March 30. Also early are Mississippi (April 2) and South Dakota (April 4).”

“The latest ever Tax Freedom Day was May 1, 2000, meaning Americans paid 33.0 percent of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9 percent of their income in taxes, meaning Tax Freedom Day came on January 22.”

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More Than Half of Americans Say Federal Taxes Too High

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Gallup: “As many Americans scramble to prepare their taxes ahead of the April 15 deadline, a majority, 52%, say the amount they have to pay in federal income tax is ‘too high,’ while 42% say it is ‘about right.’ The percentage who say their taxes are too high has hovered around 50% since 2003, although the current 52% is up from 46% two years ago.”

Posted at 7:55 a.m.
Budget & Taxes

April 11, 2014

Americans’ Views of Obamacare Remain Negative

Gallup: “Americans continue to evaluate the Affordable Care Act negatively, and their basic opinions of the law have been fairly stable over the past year. That may suggest Americans have already made up their mind about the law, for the most part reflecting their underlying political orientation, and the law’s implementation is not going to influence how they feel about the law.”

“Yet there is some evidence that Americans’ perceptions of how the law might affect their own situation both in the short-term and long-term are changing and becoming less negative. Those shifts would make sense if the law works as intended to bring more people into the health insurance system and to make it more affordable for those struggling to pay for it, while not materially affecting the healthcare of those who have it and can afford it.”

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Posted at 1:39 p.m.
Health

Reactions to the Sebelius Resignation

Jonathan CohnSebelius deserves much of the blame: “The technological failures of healthcare.gov … and the failure to anticipate a wave of private plan cancellations—represented low points for the cause of health care reform, the Obama presidency, and liberalism more generally. HHS was in charge of Obamacare implementation and Sebelius was in charge of HHS.”

“What Obamacare needed more was a deft, aggressive manager.”

Ezra Klein:Obamacare has won. And that’s why Secretary of Health and Human Services Kathleen Sebelius can resign … Sebelius can leave with her head held high. She can leave with the law she helped build looking, shockingly, like a success.”

David Graham  — It’s political: Sebelius’ “departure might offer the Democrats some political distance from Obamacare’s turbulent launch ahead of the midterm elections.

WSJ Editorial Board: It’s about accountability: “The White House kept [Sebelius] around through the Healthcare.gov fiasco last fall because letting her go then would have been admitting that not all was well. It also would have meant a confirmation hearing for a replacement while millions of Americans were losing insurance they liked.”

Amy DavidsonIt’s a victory… sort of: “The Obama Administration has decided that Obamacare has a real chance of being the sort of victory they’d always envisioned. That means that Sebelius’s departure … won’t have to represent a surrender.

But: “From the perspective of the Obama Administration, the rollout—Sebelius’s rollout—made something majestic look grubby.”

Posted at 11:51 a.m.
Health

Federal Court Appears Divided on Same-Sex Marriage

“The push for same-sex marriage, which has celebrated victory after victory in courtrooms across the country, entered an uncertain stage on Thursday as a federal appeals court appeared divided about whether the socially conservative state of Utah could limit marriage to a man and a woman,” the New York Times reports.

“In an hour of arguments inside a packed courtroom, three judges from the Federal Court of Appeals for the 10th Circuit sparred with lawyers about how such bans affected the children of same-sex parents and whether preventing gay couples from marrying actually did anything to promote or strengthen heterosexual unions and families.”

“The three judges — two appointed by Republican presidents and one by a Democrat — focused on fine-grained issues, like what level of judicial scrutiny to apply to the case, as well as more profound questions of how to define a marriage and whether state bans on same-sex nuptials were akin to those against polygamy, or instead fundamentally violated the constitutional rights of same-sex couples.”

Posted at 11:21 a.m.
Social Issues

Obamacare Will Play a Big Role in Upcoming Elections

The Hill:  “More than 80 percent of people in a new poll say the healthcare law will be an important factor in determining their vote in the midterm elections.”

“A USA Today-Pew Research survey released Thursday found 54 percent call the law “very important” in determining their vote.”

“Overall, support for the law has changed little in the past month. Thirty-seven percent approve of the law while 50 percent disapprove.”

4 10 2014 1 Obamacare Will Play a Big Role in Upcoming Elections

April 10, 2014

There Are No Moderates Left in Congress

Screen Shot 2014 04 10 at 10.32.57 AM There Are No Moderates Left in Congress

The Fix: “In the last three decades, the number of members in the middle in the House dropped from 344 (79 percent of the House) in 1982  to four (.9 percent of the House) in 2013.  As the slide suggests, redistricting — the decennial redrawing of the nation’s congressional lines — plays a major role in that decline. The last two nationwide redraws have largely been incumbent-protection efforts, making Republican districts more Republican and Democratic districts more Democratic.”

Obamacare Enrollment Now Tops 7.5 Million

Health and Human Services Secretary Kathleen Sebelius says 7.5 million Americans have now signed up for health coverage under Obamacare, a 400,000 increase from last week’s announcement by President Obama of 7.1 million,” the AP reports.

Politico noes Obama’s tally “didn’t count all the last minute enrollment surge numbers from state-run exchanges or the people allowed to complete signup after March 31.”

Meanwhile, the New York Times has a great review of the early missteps in the launch of the program.

Posted at 10:46 a.m.
Health

Transportation Pollution Biggest Threat to Global Climate

Bloomberg: “Emissions from transportation may rise at the fastest rate of all major sources through 2050, the United Nations will say in a report due April 13. Heat-trapping gases from vehicles may surge 71 percent from 2010 levels, mainly from emerging economies, according to a leaked draft of the most comprehensive UN study to date on the causes of climate change.”

“Rising incomes in nations like China, India and Brazil have produced explosive demand for cars and for consumer goods that must be delivered by highway, rail, ship or air. The new pollution, measured in millions of tons of greenhouse gases, may exceed all of the savings achieved through initiatives like subsidies for public transport and fuel efficiency.”

“Global car sales will rise 4 percent to 70.2 million in 2014 from last year, and are forecast to jump 27 percent by 2020, according to IHS Inc. The researcher expects demand to peak around 100 million units.”

“A decrease in emissions may come from government policies to change driving behavior, investments in public transport, substituting oil-based fuels in cars, ships and airplanes with natural gas, biofuels or renewable electricity, and new technologies such as lightweight vehicles and electric cars.”

November Election: It’s All About Wages

Damien Paletta: “The Democrats’ approach on wages is now taking shape: raise the minimum wage, expand the EITC, and pressure companies to narrow the wage gap between men and women.”

“The Republican approach on wages has been to call for rolling back regulations they say raise the costs of doing business, and repeal the health care law, which many in the GOP believe is causing companies to cut hours or pay.”

“The wage debate creates a relatively populist opening for both parties. It goes like this: many Americans want more money in their paychecks. Whichever party can offer ways to boost income could end up outperforming at the November elections.”

Posted at 10:13 a.m.
Economy

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