Tag Archives: political economy

Progressive-Democrats Politicizing Banking?

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Who would have thought such a thing?

House Financial Services Committee Chairwoman Maxine Waters (D, CA) has decided to use her committee to go after the hated banking industry.  Congresswoman and Committee member Alexandria Ocasio-Cortez (D, NY) has announced

We’re going to hold oversight hearings to make these banks accountable for investing in and making money off of the detention of immigrants[.]

Dangerously, and sadly, the overt intimidation seems to be working.

On February 5 JPMorgan Chase announced it will no longer do business with private prisons. In January Wells Fargo said it would no longer market to private prison companies, aiming to achieve the same objective by attrition.

Never mind that the Progressive-Democratic Party—then just the Democratic Party, with 61 Senators and 292 Representatives in that 95th Congress—politicized, and racialized, banking ‘way back in 1977 with their Community Reinvestment Act.

Today’s bankers are bowing and scraping and showing the same abject cowardice that bankers in the late ’70s and ’80s displayed when those Democrats attacked the banks for being banks—and for concerning themselves with their fiduciary duty to their owners and investors regarding loan risk.

It’s going to be a long two years for the American financial industry and so for our economy.

Defying Trump?

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That’s what the headline would have it.

The German government is poised to renege on its pledge to raise military spending, the latest gesture of defiance by Chancellor Angela Merkel toward President Donald Trump.

And

Under the new budget plan, unveiled by the finance ministry Monday, [Germany’s] spending would rise to 1.37% of GDP next year, but then decrease again to 1.33% in 2019, 1.29% in 2022 and 1.25% in 2023.

However.

Germany won’t be defying Trump. It’ll be betraying NATO and its fellow members.  Especially those eastern European members that front on Russia and behind which Germany ducks.

A Governor Misrepresents

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New York’s governor, Andrew Cuomo (D), has provided another example of the dishonesty of Progressive-Democrats as he continues to whine about his State’s excessive State and local taxes no longer being deductible above a high maximum on Federal income tax forms.

He said Trump intentionally targeted states whose populations oppose him by a majority.

And

You pay your state income tax, they then tax your state income tax payment. First time ever.

No, the first is misleading.  The SALT cap was aimed at capping Federal tax deductions generally in order to level tax requirements, at least a little, across all income levels.  That only a few States have SALT set so high that their rich residents routinely exceed the $10,000 threshold is an outcome of those few States having such excessively high taxes; it has nothing to do with where the deductibility limit is set.

The second is an outright lie.  Only New York, et al., are taxing their citizens’ State income; the Feds are simply not allowing wealthiest to deduct all of their State and local taxes from their Federal income tax bill.  Not allowing a deduction is not the same as taxing.

On the other hand, if there is double taxation; it’s the States applying the second income tax on the same income.  It’s their choice to come in behind the Feds’ income tax and apply a second—their own—income tax to that same income.

The States as double-taxers is demonstrated in two ways. One is the seven States that don’t have—don’t need and don’t want—an income tax on their citizens’ income, with an eighth State kicking its State income tax to the curb as of 2021, and the two that only tax dividends and interest payments.

The other is the number of States whose income tax requirements require submission of the Federal income tax data (not income data) as the basis for the States’ application of their own income tax.

And a double-taxation mitigating factor: most of those States that do apply their second income tax to the Feds’ income tax don’t have their SALT set so high that the payments aren’t fully deductible from the Federal income tax.  Only a few States have their SALT set usuriously high—and that’s the deliberate choice of the men of those States’ governments.

A No-Deal Brexit

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The Wall Street Journal opined earlier this week that, in the words of the piece’s subheadline,

A no-deal crash out of the EU may be the best outcome now.

The rest of the thing was a string of rationalizations of why this is true, but the heart of the matter is that subhead.

In fact, though, a no-deal departure always has been the best outcome.

A priori because that’s what the Brits voted for in their referendum—they wanted their sovereignty and control of their own borders back. Full stop.

In retrospect because Brussels has acted in bad faith, solely to punish the Brits for their effrontery, ever since. EU leadership, lately in the person of Donald Tusk, has acted in echo of Jacques Chirac’s slam on eastern European nations:

It is not really responsible behavior. It is not well brought-up behavior. They missed a good opportunity to keep quiet.

There’s no reason at all for the Brits to talk further with the EU regarding the terms of Great Britain’s departure for freedom.

Update: Yesterday, the British Parliament voted against a no-deal Brexit and in favor of going to Brussels and beg for more time to negotiate. What happened to the courage that led Great Britain to build a globe-spanning empire?

Fortunately, Parliament’s move is non-binding. We’ll see whether Prime Minister Theresa May has the courage required to stay with the scheduled date for British departure, currently 29 March.

Medical Services Price Transparency

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Hospital and insurers want to keep their pricing agreements hidden from those who must pay those prices, especially those who must pay under the duress of huge costs and the immediacy of the need for medical services.

Hospitals and insurers are gearing up to battle a Trump administration plan that could require the public disclosure of negotiated prices for medical services, part of an effort to lower US health-care costs.

Because price transparency facilitates competition, which in a capitalist, free-market economy helps drive costs down.  But hospitals and insurers insist

such a move would force them to disclose prices that would be of little use to consumers, who just want to know what they need to pay out of their pockets, not the full price of the service.

It’s true enough we want that bottom line—so we can shop around—but we also want those intermediate prices so we can get an idea of the markups we’re being expected meekly to accept.

A transition to actual transparency also would be disruptive:

While hospitals fear new demands from insurers to lower prices, insurers could also face price pressures if hospitals that get lower reimbursements demand the higher rates their competitors have won. Also, insurers that have wrangled the steepest discounts may not want those rates exposed to competitors that would then be able to push for similar pricing.

That’s uncomfortable, but it’s also temporary.  After a remarkably short time (depending on how piece meal the transition would be vs ripping the band-aid off and being done with it vs something in between), prices would stabilize, consumers would be better off, and hospitals and insurers would be adapted to open competition.  Just like the rest of the economy—say home improvement or grocers—is.

Moreover, insurer contracts are complex and hospital systems typically have multiple contracts with each insurer, each with different terms.
“It’s going to be a big lift to actually make this happen,” said Niall Brennan, chief executive of the nonprofit Health Care Cost Institute, who said he applauds efforts to make health-care pricing more transparent. If it does move forward, “It’s going to put a lot of hospital CEOs and CFOs in the hot seat.”

That last is the crux of the matter.  Transparency will embarrass some folks.  Never mind that the embarrassment often would be unjustified, except in our current professional victim environment.  Those CEOs and CFOs, for the most part, were simply doing their jobs in getting the best prices for their companies—and doing their fiduciary duties to their shareholders.

Complexity, on the other hand, might be a valid beef. However, that’s a consideration related to how to implement price transparency; it has nothing at all to do with whether price transparency ought to be implemented.