Category Archives: political economy

Food Stamps and Farm Support

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Why do we even have food stamps and farm support?  Here’s a brief, over-simplified history.  During the Great Depression, with unemployment at historic levels and mom-and-pop farms failing at a high rate (not enough income from not enough sales of produce to an unemployed population), Franklin Roosevelt pushed through Congress a pair of bills that had negative impacts on the unemployed and on those farms (and that prolonged the Depression, but that’s for a different post).

Those two bills were wage controls in the form of a mandated minimum wage that an employer could pay—or that a prospective employee could accept—and a mandated minimum price at which a farmer was allowed to sell his produce (thus, farm supports).  Think about that: in a time of enormous unemployment (Obama’s 10% unemployment in 2009 was full employment, and today’s 7.2% is Phat City compared to Depression levels), Americans were priced out of the labor market.  And at the time those Americans couldn’t get work, they had no income from which to pay those artificially inflated farm prices.

Roosevelt thought about that, and the light went off in his head: he pushed through Congress a mechanism for giving subsidies to the poor (read: unemployed) so they could afford to buy food (thus, food stamps). (It didn’t occur to this Progressive to rescind his minimum wage and price support programs so the markets could clear, folks could get work, and they could buy their own food.)

That’s the long and short of it: food stamps and farm supports are Depression-era attempts fix a failing economy.  Today, Americans pay over $14 billion annually in the form of farm support tax money transfers, and we pay nearly $80 billion per year in the form of food stamp tax money transfers (to a near-record 47 million Americans).

What to do about this?  Much has been made, especially by conservatives and by Conservatives, of States’ Rights—the 10th Amendment, and all that.  What too often gets overlooked, though, is the dual of that: States’ Obligations.  The States should be taking care of themselves on this, not taking money from the taxpayers of other States’ citizens.

My solution is in two parts.  One part is to take all money the Feds currently send to the States for farm support and food stamps and convert the funds to block grants, making the year of conversion the baseline year.  Every year after that, reduce the size of each block grant by 10% (let’s say) of the baseline amount until the money being sent to each state for each program is $0.  This gradual, but steady, forced reduction gives the States time to break their addiction to OPM and to adapt to relying solely on internal State funds for what are essentially internal State problems.  Aside from that, the good citizens of nearly bankrupt New York or nearly bankrupt Illinois have no business being forced to send their tax money to a nearly bankrupt California or a flush Texas.

The other part is to get rid of the ethanol mandates.  American refineries are required by the EPA to blend over 18 billion gallons of ethanol into their gasoline.  The primary source of that ethanol is corn, and as recently as 2011, 40% of US corn production went to ethanol rather than to food.  That elevates the price of a broad range of food, and not just corn-based food, at that.  Food that eats corn—beef and chickens, for instance, and the eggs from corn-fed chickens, get elevated prices from that diversion.  It spreads further: the prices of corn substitutes, like wheat, soya beans, and so on, are also elevated by this diversion.  The States’ problems funding their own food stamp programs (to the extent any of these programs persist when the States discover they can’t fund them with OPM) will be greatly reduced by the increase in food affordability due to the elimination of this pernicious mandate.

Really, What Default?

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President Barack Obama and his…colleagues…in the Senate keep threatening national default if those Evil, Anarchist, Terrorist Jihadi Republicans don’t promptly shape up and pass a budget, raise the debt ceiling, and otherwise give him a blank check.  One of his more recent threats is this:

…if Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting.

Let’s look at some numbers:

So much for default.  Federal revenues exceed debt payments by roughly 12:1.  There’s a double potful of money left over, too, even by DC standards—nearly $2.5 trillion.

What other major expenses are there?

  • Social Security and Medicare payouts in 2012 (close enough to 2013 outlays for this discussion) were a combined $1.4 trillion.
  • Medicaid and CHIP transfers to the states in 2012 ran to $260 billion.

(Incidentally, the various Social Security System trust funds had some $2.6 trillion on hand as of 2012.  Although payroll tax revenues aren’t enough to cover outlays, so that pile is being drawn down, there’s plenty to last through quite a long delay in raising the debt ceiling.  Let’s assume for the sake of this illustration, though, that the SS/Medicare outlays are being paid out of the general revenues.)

Our debt payments are easily covered (so no default) and so are our entitlement payments (so our seniors and our poor are taken care of), and we have $840 billion in annual Federal revenues left to spend on such minor matters as national defense, Federal payroll, scheduled payments to government contractors, and so on.

Certainly, those Federal revenues come in in fits and starts, but that’s the environment any private sector business faces all the time.  They plan ahead so they can deal with those uneven flows.  The Federal government can do such planning, also.

The only way a default will happen will be if Obama decides not to make the debt payments.  The only way our seniors and poor will be hurt will be if Obama decides to withhold payments to them.  His only purpose for doing such shameful things is to make a political point, to heap blame on Republicans for his own failures.

One last thing: it’s interesting to note that he’s threatened to veto a House proposal to mandate prioritizing Federal outlays.

An Evil Banker Steps In

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At a meeting of the Institute of International Finance on Saturday, Jamie Dimon, JP Morgan Chase & Co CEO, said…his bank would fund the $6 billion to $8 billion in [Social Security payments] that the bank processes each week for its clients, even if the government doesn’t actually pay those obligations.
…
“Instead of the government putting it in, we are.  We’ll let them overdraft for it and won’t charge them for it, and then hopefully the government will give us the funds back[.]”

Just like a predecessor Evil (JPM) Banker did 100 years ago, during the Panic of 1907.

Western Civilization

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HHS Secretary Kathleen Sebelius had something to say about our fate on a recent episode of The Daily Show.  She made the remark after the show had finished airing, but in a post-show segment before the studio audience—and so still on the record.  Here’s her statement:

As you know, we’re facing the end of the Western Civilization by having a market-based strategy.  We’re bringing Western Civilization its knees by having a private insurance plan on a website where people pick and choose.

Lloyd Grove, writing about this for The Daily Beast, suggested that Sebelius was merely trying for humorous sarcasm.

Or was she serious?

A “Fix” for Obamacare

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Christopher Weaver and Louise Radnofsky wrote in their optimistically titled Wall Street Journal article, “Healthcare.gov’s Flaws Found, Fixes Eyed,” that, among other things,

By Thursday morning, a new tool that allows users to preview plans without registering appeared on the site with little fanfare.

I’ll come back to that.  First, though, here’s a bit of the backstory on that claim, also from Weaver and Rasdnofsky’s article.

Much of the problem stems from a design element that requires users of the federal site, which serves 36 states, to create accounts before shopping for insurance, according to policy and technology experts.  The site, HealthCare.gov, was initially going to include an option to browse before registering, but that tool was delayed, people familiar with the situation said.

The upshot of this decision (which was made not for technical reasons but so that a purely politically determined deadline for the Web site’s rollout could be met) was that at any point along the sequence of steps involved in account generation, a failure—a “glitch”—could halt the entire process.  Those bottleneck points include

  • software for collection of user information
  • software transferring data to a system used by Medicare’s Enterprise Identification Management
  • software sending data to a separate party’s system for confirming new users’ identities
  • a government identity-checking system

As an aside, it’s important to note that these technical problems would have been there waiting to bite a poor user after he made his choice and moved actually to buy a policy, albeit somewhat mitigated by the reduced number of actual buyers compared to the larger number of shoppers.

The foolishness of deciding to not bother with this standard, economy-wide shopping sequence has been noticed by folks besides me:

“People should be able to get [insurance] quotes” without going through the technical hurdles upfront, said Jay Angoff, a former director of the federal office overseeing the development of the marketplace, also known as an exchange[.]

When was the last time you went to Walmart to check prices and the door greeter required you to fill out an account application form—and be approved for that account—as a condition of gaining entry to the store?  Or Amazon?

Anyone?  I didn’t think so.

But that’s all fixed as of last Thursday, was it?  Not so much.  Below are a couple of screen shots of my attempt to shop before opening an account yesterday (Sunday, three days after this “fix” was rolled out).

On selecting the shopping path from the opening page of the version of HealthCare.gov set up in Texas, I was met with a few questions designed to characterize my demographic so the Fed’s exchange could know for what sort of policies I was eligible.  So far, so good.  This screen shot is what greeted me on hitting NEXT after answering the demographic questions:

Yep.  No policy options, no attempt to refine my status, just many statements of “You might consider this search, you ought to learn about that,” and so on.  So I tried to consider and to learn: I selected the “How can I get lower costs…” at the bottom of the above screenshot, and the next screenshot is what I got in response:

Yep, again.  No policies with coverage descriptions and premiums charged.  More stuff about what to learn, things to consider.  It’s important to note that this is a long page, with a long list of things I ought to consider or to learn about, all based, ostensibly, on that demographic information I provided at the start of this parade.  Scrolling to the bottom of the page, this is what I got:

In case the link is hard to read, it says [emphasis added], “apply for coverage, compare plans, and enroll.”

I still have to apply first, and see coverage options and prices second.  Two weeks into the Obamacare Purchase Program failure.

This is the capability of a Federal government that insists it knows better than we do how to manage our health care and our health insurance.