Tag Archives: economics

Obamacare Subsidies

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Recall that under Obamacare, health coverage plan providers are required to subsidize low-income Americans (who, under Obamacare, are required to buy the plans regardless of need for the plans on offer or ability to pay the vig for them) for their costs in buying those health coverage plans.  Recall further that the Obama administration paid those plan providers monies to reimburse them for those government-mandated subsidy payouts.  Recall also that Congress never appropriated any funds for the purpose of making those payments to the plan providers.  Finally, recall that a DC District court ruled those payments to the health plan providers illegal—because Congress had not appropriated any funds for the purpose.  Then the Trump administration ceased those payments to the health plan providers.

Oh, the hoo-rah from the Left.  Eighteen Progressive-Democrat-led States sued in Federal court (in San Francisco, California, after judge-shopping to find a suitably malleable court), centering their beef on how stopping the payments would set the Obamacare markets a-roil.  Never mind, now, how cynically irrelevant that plaint is to the actual case before the courts, which is whether the payments are legal, not whether they’re convenient.

Federal judge Vince Chhabria, of the Northern District of California, headquarted in San Fran, wound up ruling against the 18 States.  He also wrote,

And although you wouldn’t know it from reading the states’ papers in this lawsuit, the truth is that most state regulators have devised responses that give millions of lower-income people better health coverage options than they would otherwise have had

And he

cited an October press release by California’s health care marketplace, which said the premiums of nearly four of five consumers will stay the same or decrease after surcharges tied to the lost subsidies are factored in. The judge said dozens of other states also have accounted for the end of the subsidies.

And

One last point on the issue of confusion.  If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums. With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination that will prevent harm to the large majority of people while in fact allowing millions of lower-income people to get a better deal on health insurance in 2018.

Oops.  Just another bit of disingenuousity on the part of Progressive-Democrats as they try to keep honest Americans trapped in the Progressive-Democrat welfare cage.

Judge Chhabria’s ruling can be read here.

Federal Deductibility of State Taxes

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The current Republican Federal tax reform plan on offer, at least as described by the NLMSM, includes elimination of the deductibility of State taxes on our Federal tax returns.  Naturally, Progressive-Democrats object.  Here’s New York Governor Andrew Cuomo (D), as a canonical example:

This is probably one of the most destructive policies to the state of New York I’ve heard proposed in 30 years[.]

What Cuomo and his ilk carefully ignore is that with significantly lower tax rates and a doubling of the standard deduction the value of a state tax deduction—even for high-tax States—is markedly lowered.  What they also carefully ignore is that it’s primarily their hated rich who use the deduction at all—most of the rest of us don’t incur enough expenses to be able to itemize our deductions, even (especially) medical expenses, which must exceed 10% of our AGI, anyway (and which threshold those same Progressive-Democrats want to preserve).

That doesn’t seem very destructive.

Guys like Congressman Peter King (R, NY), on the other hand, simply misunderstand the situation.  King insists, for example,

The deduction is essential for these people to get by.

His beef and that of his fellows in high-tax States, though, is with those State governments, not with the tax reform plan.  What’s essential is that those States’ usurious tax rates be lowered, so “these people” can get by with more of their own money left in their own pockets.  King and his fellows should be working to lower their States’ taxes, not preserve them.

Health Plan Providers Are Concerned

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These providers, which surprisingly The Wall Street Journal misapprehends as insurers, are bracing for a drop in enrollment in the ongoing health plan provision program “turmoil.”  There’s this key passage in the article at the link:

[M]any firms say they expect to lose consumers who will bear the full brunt of the rate increases—those who aren’t eligible for the health law’s premium subsidies, which help enrollees with annual incomes of less than around $48,000.

Yet it’s the “health law” that exploded health plan costs—premiums and deductibles, especially—by mandating coverage for things citizens don’t need or don’t want and by mandating that many of those coverages be provided at no cost to the plan purchaser.  This has led to a burial of many of those costs into the charges made rather than listing them openly as separate line items on the charge sheet and a parallel creation of the claimed need for the subsidies.

Those costs put a premium on getting rid of Obamacare and replacing it with a private economy program of market oriented, actual health insurance policies sold by private companies not fettered by Federal government diktats.

That, in turn, requires three self-important Republican Senators to get with the program.  Senators John McCain (AZ), Lisa Murkowski (AK), and Susan Collins (ME), especially, need to hear about our dismay with their reticence—and on a national scale.  These worthies are responsible to their State constituencies, to be sure, but the US Senate is a national body; these Senators also have a national constituency to whom they’re responsible, for all that the rest of us don’t vote for them.

The National Association of Realtors Objects

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The NAR is objecting to the current tax reform plan’s essential doubling of the standard deduction to $12,000 for single filers and to $24,000 for married couples.

The Realtors are upset because they say this middle-class tax cut would make fewer taxpayers use the mortgage-interest deduction. The National Association of Realtors trashed the framework in a statement, saying it “would all but nullify the incentive to purchase a home for most, amounting to a de facto tax increase” and ensure “that only the top 5% of Americans have the opportunity to benefit from the mortgage interest deduction.”

This is beyond disingenuous; it’s dishonest.

Doubling the standard deduction to $24,000 leaves an extra $12,000 in that family’s take-home income. That means that that family can accumulate a 20% down payment on a $240,000 home (in well-off Plano, TX, real estate market, that works out to a roughly 2,300-2,600 sq ft, 4-bedroom home) in just four years, instead of forever. That’s a strong incentive to buy a home—and these folks, shorn of the mortgage interest deduction as the NAR bleats, are not in those 5%.  They wouldn’t need the “benefit from the mortgage interest deduction.”

Oh, wait—that family might choose to replace their beater with a new, or a newer used, car that would be cheaper to run instead of buying a house. The family could pay cash for that car, rather than borrow for it, in just two years.

NAR knows all of this.

Laziness

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Citigroup, Deutsche Bank, and HSBC, banks allegedly involved in rigging the erstwhile international debt interest rate benchmark LIBOR, are going to pay $132 million in aggregate to “settle” a court case over that alleged involvement.

The proposed settlements…include no admission of wrongdoing.

The banks are paying the money for—as the plaintiffs plainly agree by their own acceptance of the settlement—not doing anything.

This is a bad deal. If the banks didn’t do anything wrong, for what are they paying? If they deserve fines, why aren’t they being kept in court for an on-the-record public recitation of their wrongdoing and punishment?

Sounds like indulgences, to me.